Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — QUEEN FREDERIKA OF GREECE

Mr. Awbery: asked the Lord Privy Seal why Her Majesty's Government apologised to the Queen of Greece for the action of demonstrators in London who made a protest against the imprisonment of 1,100 political prisoners now in Greek prisons, requesting an immediate amnesty, in support of views publicly expressed by over 100 hon. Members of this House.

The Lord Privy Seal (Mr. Edward Heath): I have nothing to add to what my right hon. Friend the Prime Minister said in reply to Questions on 2nd May.

Mr. Awbery: Is the Lord Privy Seal aware of the conflicting opinions held by the Government regarding this case? He stated on 8th May that Queen Frederika had been assaulted. The Home Secretary, the following day, said that the Queen had not been touched. Could he now present us with a report from the police so that we can get an accurate account of what happened? There was no offence as suggested on that day against the Queen. This case has been magnified mainly by the Press as opposition to Royalty in order to hide the real facts behind it that there are 1,100 men now in prison who have been there for 17 years.

Mr. Heath: Any question of a report on the action of the police is a matter for my right hon. Friend the Home Secretary. My right hon. Friend the Prime Minister dealt with the point that the hon. Gentleman has raised on the last occasion that this was discussed in the House, and he said that, of course, he

accepted the statement of Her Majesty Queen Frederika that she was molested.

Mr. Awbery: She was not molested.

Mr. F. M. Bennett: Is my right hon. Friend aware that if there has been any magnification of this incident, it has been not by the Press but by those who keep on raising over and over again a question which for the good name of this country had better be buried as soon as possible?

Mr. Heath: This particular incident has been dealt with by my noble Friend the Foreign Secretary and by my right hon. Friend the Prime Minister and should be allowed to be left there.

Oral Answers to Questions — WEST NEW GUINEA

Mr. Godman Irvine: asked the Lord Privy Seal what steps have been taken by the United Nations Authority now in West New Guinea in respect of Article 16 of the agreement between Indonesia and Holland which provides that the indigenous people may decide their own future by the end of 1969.

The Joint Under-Secretary of State for Foreign Affairs (Mr. Peter Thomas): There is no United Nations authority now in West New Guinea. The United Nations Temporary Executive Authority left the territory on 1st May after transferring the administration to Indonesia, and the United Nations' Representative envisaged in Article 16 of the Netherlands-Indonesian Agreement has not yet been appointed.

Mr. Irvine: Is not my hon. Friend aware of the alarm that has been caused throughout the Pacific and elsewhere by the fact that the six democratic parties and the people of West New Guinea have been handed over to a dictator without any semblance of a democratic process? Is not my hon. Friend further aware that this alarm is increased by the contrast between that and the United Nations Committee's recommendations that the Secretary of Papua should increase the rate of democratic advance before independence? In these circumstances, does not he feel that Her Majesty's Government should firmly place these facts before the United Nations?

Mr. Thomas: The position is that the United Nations has done everything that is required under the Netherlands-Indonesian Agreement.

Oral Answers to Questions — ADEN (UNITED NATIONS MISSION)

Mr. Brockway: asked the Lord Privy Seal what response was made by the British representative on the General Assembly's special committee on colonialism to the proposal that a United Nations visiting mission should be sent to Aden to investigate how far the Federation of South Arabia represents the wishes of the peoples.

Mr. Heath: The Committee of Twenty-Four was informed that Her Majesty's Government were unable to agree to this proposal.

Mr. Brockway: Is not the right hon. Gentleman prepared to reconsider this whole issue? Is it not clear that the majority of the members of the United Nations take the view that when peoples do not have the right of self-government, there should be some intervention by the United Nations in these cases? Are we not now living in a world when the United Nations will function in this respect?

Mr. Heath: We have co-operated very fully with the Committee of Twenty-Four by taking part in these discussions and by giving it full information, but the ultimate responsibility rests with Her Majesty's Government, and I cannot therefore accept the hon. Member's suggestion.

Sir G. Nicholson: Is my right hon. Friend aware that the people who suffer most from this sort of thing are the United Nations and that when missions sent to colonial territories are composed of representatives of nations which do not know the first thing about democracy or have trade union leaders, that can only be interpreted as grossly insulting to this country?

Mr. Heath: Our purpose is to give all the information we can to the Committee and to explain to it the democratic processes which we ourselves follow.

Mr. Mayhew: Should we not consider the practical consequences of our refusal,

for we still get the United Nations inquiry and the debates at the United Nations? What do we gain by refusing access, except a more tendentious and one-sided inquiry? Do we not just give the impression of having something to hide and having a hostility to the United Nations which we should not show?

Mr. Heath: What we gain is that the process of government of these territories is not affected by a visit. In this case, the petitioner Mr. Farid, from the Federation itself, fully explained the situation there, in addition to the British representative's explanation, and the Federation has no desire that this Committee should visit the Federation at all.

Oral Answers to Questions — ABERDEEN TRAWLER "MILWOOD" (DETENTION)

Mr. Hector Hughes: asked the Lord Privy Seal (1) if he will state the text of the note handed last Saturday by the Icelandic Foreign Minister to the British Ambassador in Reykjavik, the reply sent to it, and the action taken as a consequence; and if he will take steps to have the trawler "Milwood", now detained in Reykjavik, restored to her owners in Aberdeen who are now suffering loss by her detention in Reykjavik;
(2) if he will make a statement on the recent interview between the Secretary of State for Foreign Affairs and the Icelandic Ambassador Mr. Henrik Bjornsson, about the detention in Reykjavik of the Aberdeen trawler "Milwood".

Mr. Heath: The Icelandic Ambassador called on my noble Friend on 10th May to discuss the Icelandic Note of 4th May. This gave the Icelandic Government's views on the "Milwood" incident and requested that Skipper Smith should return to Icelandic jurisdiction. Her Majesty's Government replied on 17th May giving their views on the incident and expressing the hope that it would not disturb AngloIcelandic relations. Our Note explained that although Her Majesty's Government had no power to compel Skipper Smith to return to Iceland to stand trial, we hoped that he would do so. We are awaiting the Icelandic Government's response to this Note.
The Icelandic Government have not published the text of their Note, but I am


circulating in the OFFICIAL REPORT the text of our Note of 17th May. As for the detention of the "Milwood", I would refer the hon. and learned Member to the reply given to his Question of 22nd May by my hon. Friend the Joint Under-Secretary of State.

Mr. Hughes: May I thank the Lord Privy Seal for that full reply? Does he realise that I have full confidence that the Icelandic Supreme Court will administer the rule of law when the case comes before it? Does he also realise that this trawler was seized by force in mid-ocean without any order of the court, that the case is in no way sub judice and does not depend on the evidence of Skipper Smith? Will he approach the Icelandic Government on that basis with a view to resolving the conflict between the Icelandic court and the administrative authorities who control the gunboats which fired on and seized our trawler, and on that basis have the trawler released?

Mr. Heath: I am very glad to hear the hon. and learned Gentleman's confirmation of his belief in the justice of Iceland. This will support our view that Skipper Smith should return to its jurisdiction. The "Milwood" was detained upon a ruling by a judge of the Icelandic court pending an inquiry into the incident. That is the situation at present and presumably it must remain so until the inquiry is completed.

Following is the text of the Note:
Her Majesty's Principal Secretary of State for Foreign Affairs presents his compliments to His Excellency the Icelandic Ambassador and has the honour to refer to the Icelandic Government's Note of the 4th of May about the incident involving the Aberdeen trawler "Milwood" and the Icelandic Coastguard Vessel "Odinn".
As Mr. Edward Heath stated in his message of the 30th of April to His Excellency the Icelandic Minister for Foreign Affairs, Her Majesty's Government were most distressed to learn that the incident had taken place. They share the serious view of it which is taken by the Icelandic Government.
Her Majesty's Government recognise that the Commander of the Icelandic Coastguard Vessel "Odinn" refrained from using force to arrest the trawler. Her Majesty's Government, however, wish to invite the attention of the Icelandic Government to the fact that the Commander of H.M.S. "Palliser" used his best endeavours to ensure the arrest of the "Milwood" by the "Odinn" with Skipper Smith aboard. As a result of this co-operation from the Royal Navy the trawler was in fact

arrested. However, in the interval between the transfer of "Milwood's" crew to H.M.S. "Palliser" and the arrival on board "Mil-wood" of the Icelandic boarding party. Skipper Smith's conduct and state of mind led Lieutenant-Commander Hunt to the conclusion that the only mean open to him of preventing Smith from endangering his own life was to transfer him to the trawler "Juniper" Lieutenant-Commander Hunt took this action in the firm belief that "Juniper" would be ordered to proceed at once to Reykjavik and would do so. He was surprised and dismayed when "Juniper's" owner declined to order "Juniper" to go to Reykjavik.
Her Majesty's Government deplore the fact that Skipper Smith evaded arrest in this manner and wish to tender their sincere regrets. They also accept full responsibility for the action of H.M.S. "Palliser" on the 27th and 28th of April.
While Her Majesty's Government are obliged fully to reserve their position on the issues of fact and law that may be involved, Her Majesty's Government have on several occasions advised the owner of the "Milwood" to persuade Skipper Smith to submit to Icelandic jurisdiction. It remains their hope that he will agree to do so.
They very much hope that after this explanation the incident involving the "Mil-wood" will not be allowed to disturb the good relations between Iceland and the Untied Kingdom to which the British Government attach so much value.

Mr. Jeger: asked the Lord Privy Seal what action has been taken by the British Embassy in Iceland to assist the crew of the arrested trawler "Milwood".

Mr. Heath: Five members of the "Milwood" crew have stayed in Iceland at the request of the owners. I am informed that they are not in need of assistance.

Mr. Jeger: Can the Lord Privy Seal say whether the men are in touch with the embassy or whether the embassy is keeping a supervisory eye on them? Can he give an assurance that if these men, who have been deserted by their skipper, who has come back to England, require assistance it will be readily given to them.

Mr. Heath: Yes, Sir. The Ambassador is in close touch with the men. He has reported that the owners asked the men to stay there and so far they have agreed to do so. If they are in need of any assistance, I am sure that they will be in touch with the Ambassador, and he will, naturally, do everything possible.

Mr. Hector Hughes: Does the Lord Privy Seal realise that great financial loss is being inflicted not only on the crew but


also on the officers and the owners of the ship by its unlawful detention in Reykjavik, and that the owners have given a banker's guarantee to the Icelandic Government to pay any fine or costs which may ultimately be inflicted on them, and that it is up to the British Government to support the owners in that very proper and fair guarantee? What is the Minister doing about it?

Mr. Heath: I have explained the legal grounds on which the ship is being detained in Iceland pending an inquiry. I understand that the men are being paid by the owners while they are on the ship.

Oral Answers to Questions — UNITED NATIONS

Charter (Special Agreements)

Mr. Longden: asked the Lord Privy Seal what attempts have recently been made by the Military Staff Committee of the Security Council to negotiate the special agreements referred to in Article 43 of the Charter without which the sanctions intended to enable the Security Council to fulfil its primary responsibility for maintaining international peace and security cannot be enforced; and what are the reasons still preventing the conclusion of these special agreements eighteen years after the Charter was signed.

Mr. Heath: None, Sir. The Military Staff Committee reached deadlock at an early stage over the general principles that should govern the organisation of the armed forces to be made available to the Security Council by Member States. Nothing has occurred since to resolve this disagreement.

Mr. Longden: Could not the Soviet Union be reminded that Chapter 7 of the Charter cannot be brought into operation unless it is so decided by the Security Council, on which the Soviet Union retains its veto? What is the object of holding up the operation of these sanctions?

Mr. Heath: I will certainly consider my hon. Friend's suggestion, but I am afraid that there is no indication that the Soviet Union would be prepared to agree to the implementation of the Military Staff Committee.

Finance

Mr. Prentice: asked the Lord Privy Seal if he will make a statement on the special session of the United Nations General Assembly dealing with the financial situation of the United Nations.

Mr. P. Noel-Baker: asked the Lord Privy Seal what proposals Her Majesty's delegate has laid before the General Assembly of the United Nations concerning the budget of the organisation; and whether he will make a statement.

Mr. Grimond: asked the Lord Privy Seal what instructions have been given to the United Kingdom representative at the United Nations in relation to the refusal of the Union of Soviet Socialist Republics to pay her contribution to the United Nations; and if he will make a statement.

Mr. A. Henderson: asked the Lord Privy Seal whether he will state the policy of Her Majesty's Government with the object of maintaining the solvency of the United Nations Organisation, in view of the continued refusal of a large number of the members of the United Nations Organisation to pay their dues in accordance with the provisions of the Charter.

Mr. P. Thomas: The United Kingdom has not yet formally tabled any proposals at the General Assembly. Our views, however, are well known from the public proposals we put forward in the Working Group of Twenty-One. We are at present engaged in informal discussions with other delegations on the immediate problems of solving the financing of the United Nations Emergency Force and the Organisation des Nations tinier au Congo for the remainder of 1963 and of the collection of arrears from defaulting members. The Russian refusal to contribute to the United Nations Emergency Fund and the Organisation des Nations Unies au Congo accounts is one aspect of this problem.

Mr. Prentice: While supporting the views expressed by the hon. Gentleman about the position of the Russians and others, may I ask whether the Government would give further consideration to the proposals put forward by India and certain other countries for voluntary


peace-keeping funds? Although this may be an unsatisfactory expedient, less satisfactory than a permanent solution, is it not better to have something like that rather than see the organisation drift into a position in which it can no longer undertake these peace-keeping operations?

Mr. Thomas: We will consider this and other proposals, but our main objective is to see that there is collective financial responsibility.

Mr. Grimond: Is it not the case that the Russians have said that they will contribute only to purposes of which they approve? If that is so, would the Government consider pointing out to them that this will make a complete farce of everything for which the United Nations stands and is simply old imperialism in modern dress?

Mr. Thomas: Yes, Sir. I have seen a report to the effect of what the right hon. Gentleman says about the Russian attitude. It certainly indicates a hardening of the Russian attitude, but at the moment this should not divert us from our main objective, which is to reach agreement with the great majority of the members of the United Nations who sincerely wish to see a solution to the organisation's financial problems.

Mr. Henderson: Has not this parlous financial position of the United Nations become a major political problem? May we have an assurance from the hon. Gentleman that Her Majesty's Government will not participate in any drastic action until after high-level talks have taken place among the four permanent members of the Council, including the Soviet Union?

Mr. Thomas: I agree that this is a major political problem. At the moment we are trying to reach agreement with the majority of the members of the Assembly in this special session, but we will consider the matter raised by the right hon. and learned Gentleman.

Sir J. Duncan: Would it not be a good idea if we suggested that those members of the United Nations which had not paid up could not vote?

Mr. Thomas: That is the effect of the advisory opinion of the International

Court in relation to Article 19. Perhaps I should say that, although there are 69 members in arrears, only one member is liable to be penalised under Article 19, and I am informed that that member has given notice that it intends to make payment, so that it will not be penalised; so that this matter does not arise at the moment.

Mr Warbey: Would not the hon. Gentleman tell the House the whole truth, which is that no fewer than 47 members of the United Nations, including members of both the Eastern and Western blocs and of the non-aligned countries, have so far not paid a single penny towards the Congo operations? In view of this situation, is it not absolutely essential that some supplementary means should be found of raising funds for peace-keeping operations? Will not the Government adopt a more sympathetic attitude towards the proposals for a voluntary fund put forward by a number of non-aligned nations?

Mr. Thomas: Yes, Sir. It is true that many countries are in arrears, countries both of West and East, but there are many countries in arrears because of financial difficulties, and I do not think that that obtains in the case of the Communist bloc.

Special Political Committee (Republic of South Africa)

Mr. Longden: asked the Lord Privy Seal whether the views of Her Majesty's Government with regard to the relevance of Article 2(7) of the United Nations Charter to the racial policies of the Government of the Republic of South Africa remain as stated by the United Kingdom representative in the Special Political Committee of the United Nations on 31st October, 1961, and 20th October 1962.

Mr. Heath: The remarks in question should be read as references to the statement made by the United Kingdom representative in the Special Political Committee on 5th April, 1961, in which the full views of Her Majesty's Government were given. The text of that statement is contained in the report on the proceedings of the Fifteenth Session of the General Assembly of the United Nations, Cmnd. 1456.

Voluntary Peace-Keeping Fund

Mr. E. L. Mallalieu: asked the Lord Privy Seal whether the United Kingdom representative on the United Nations Working Group on the Examination of the Administrative and Budgetary Procedures of the United Nations supported the suggestion in its Report for a voluntary peace-keeping fund.

Mr. P. Thomas: No, Sir. The current Special Session of the General Assembly is concentrating, in our view rightly, on the more immediate problems of collecting arrears of contributions and of working out arrangements for financing the United Nations Emergency Force and the Organisation des Nations Unies au Congo for the remainder of 1963.

Mr. Mallalieu: Is the Under-Secretary of State aware that no fewer than seven of the non-aligned countries have already expressed their approval of this voluntary peace-keeping fund? Can he give any real reason why people should not be able to demonstrate their loyalty to the world community in this way if they wish to?

Mr. Thomas: I am aware of the views that have been expressed by the countries to which the hon. and learned Member has referred, but we regard it as extremely important to preserve the basic principle of the collective financial responsibility of the members of the organisation for its activities.

Sir C. Osborne: Why should we expect a voluntary peace-keeping fund to be any more effective than the old Kellogg Peace Pact of 1928 which, when it came to the test, was so futile and so useless?

Mr. Thomas: We certainly agree that the suggestion is not a very practical one.

Mr. Warbey: Will the Minister bear in mind that the whole purpose of these operations is to put teeth into what were formerly pious aspirations; that we cannot have teeth without money, and that when people voluntarily pay money for action, they are more likely to be interested in it, and to support it?

Mr. Thomas: The very fact that the hon. Gentleman has said one cannot have teeth without money indicates how very out of date he always is.

CONFERENCE OF AFRICAN STATES

Mr. Wall: asked the Lord Privy Seal what representations he has received from Governments who attended the recent Conference of African States at Addis Ababa about areas of British responsibility in Africa.

Mr. Heath: Her Majesty's Government have not received representations of such a kind from the Conference. Any other communications on this subject which may be received from Commonwealth or foreign Governments are confidential.

Mr. Wall: While appreciating the degree of economic co-operation at this Conference, may I ask whether my right hon. Friend would care to comment on the remarks of the Prime Minister of Uganda who is alleged to have offered his country for the training of "freedom fighters" and to have said, "There is going to be war"? What action do the Government take when one Commonwealth country appears to threaten war against another?

Mr. Heath: I have seen reports of this kind. Naturally, we regret them.

SOUTH-EAST ASIA TREATY ORGANISATION (MEETINGS)

Mr. Harold Davies: asked the Lord Privy Seal if, in view of the fact that the South-East Asia Treaty Organisation communiqué issued by the United States Information Service of the American Embassy in London on Thursday, 11th April, is the only published information on the South-East Asia Treaty Organisation Council's eighth meeting in Paris from 8th to 10th April, he will make available to Parliament more detailed information about these meetings.

Mr. P. Thomas: No, Sir. The South-East Asia Treaty Organisation communiqué contains all the information on the confidential proceedings that those participating agreed to release.

Mr. Davies: Is the hon. Gentleman aware that hon. Members on both sides of the House deprecate the growing tendency of the Executive to give less and less information to Parliament about these fundamental treaties and other facts? Will


he please now tell the House whether a new convention has arisen that no information is given to hon. Members unless they ask for it? Can he say what is the meaning of the bilateral treaty between Siam and the United States of 6th March in relation to the S.E.A.T.O. Treaty, because of the new doctrine of flexibility in S.E.A.T.O.?

Mr. Thomas: Her Majesty's Government have undertaken no new commitments to S.E.A.T.O. In reply to the first part of the hon. Member's supplementary question, it is, of course, traditional that the proceedings at meetings of this sort, which are confidential, should not be disclosed beyond the communiqué which is released.

Mr. Davies: But is the Joint Under-Secretary aware that the new doctrine of flexibility reads that
…action does not depend on the prior agreement of all parties to the Treaty since"—

Mr. Speaker: Order. A verbatim quotation is out of order at Question Time.

Mr. Davies: I apologise, Mr. Speaker. This Treaty does not necessarily need the united acquiescence of the rest of the signatories; in other words, there is bilateral power to take action.

Mr. Thomas: Positive acceptance of any proposal is still necessary for any commitment.

CENTRAL TREATY ORGANISATION

Mr. Harold Davies: asked the Lord Privy Seal if he will make available to Parliament a more detailed report of the 11th Central Treaty Organisation meeting at Karachi than the two-page typescript now available in the Library; and what it has cost Britain to date to remain a member of the Central Treaty Organisation.

Mr. P. Thomas: Copies of the official communiqué and the secretariat's record of the opening session of the 11th Central Treaty Organisation Ministerial meeting in Karachi are now available in the Library, together with various booklets on the Central Treaty Organisation.
Her Majesty's Government's share of the organisation's secretariat and military planning staff budgets has, since August,

1959, totalled £150,700. In that period Her Majesty's Government have also contributed approximately £2,600,000 in economic, and £2,756,000 in military aid to the regional countries of the organisation.

Mr. Davies: Does that figure include our contribution to the infrastructure in the area, and does it include our contribution to building the railway between Mush and the eastern area of the C.E.N.T.O. Treaty obligations? Will he not let Dr. Beeching know about this magnificent railway project in case he plans to close it on strategic or economic grounds?

Mr. Thomas: The figures T have given, from the economic point of view, certainly include things like technical assistance, ports and telecommunication links between the regional capitals.

Mr. Davies: What about the railway?

UNITED ARAB REPUBLIC (PROPERTY OF BRITISH NATIONALS)

Mr. Wall: asked the Lord Privy Seal if he will make further representations to the Government of the United Arab Republic about the release of, or payment of compensation for, the property of British nationals resequestrated in October-November, 1961.

Mr. P. Thomas: Frequent representations have been made in this matter. I regret that the United Arab Republic Government have not yet communicated their decision whether the property of the British nationals concerned is to be released or, if not, how compensation is to be paid. As my right hon. Friend said on 1st May, 1962, however, it seems clear that they will accept the principle of compensation for any property which is not released. Our most recent information is that a decision may he expected comparatively soon.

Mr. Wall: Would not my hon. Friend agree that there is now no threat from Israel, which was really the excuse for these seizures? Is he aware that some of these properties fall under the terms of the Anglo-Egyptian Financial Agreement, and will he do his best to reach finality on this matter?

Mr. Thomas: Yes, Sir.

NORTH ATLANTIC TREATY ORGANISATION (NUCLEAR FORCE)

Mr. Warbey: asked the Lord Privy Seal what reply he has made to the official Russian protest against British acceptance of the proposal for a North Atlantic Treaty Organisation force of Polaris-carrying surface ships with West German participation.

Mr. Heath: Copies of Her Majesty's Government's reply of 18th May to the Soviet Note of 8th April about the proposed North Atlantic Treaty Organisation nuclear force have been placed in the Library of the House.

Mr. Warbey: In view of the terms of that reply, and of the American Government's reply, can the right hon. Gentleman give the House an assurance that the American Government have now finally and definitively withdrawn their original proposal that the Polaris missile carriers should be of the cargo type, possessing the advantage of considerable anonymity through being able to count on the identity protection of as many as 4,500 merchant ships operating every day in the waters in which they would operate? Have they withdrawn that proposal and, if so, as this was put forward in order to meet the criticism of vulnerability, what now becomes of the argument of vulnerability?

Mr. Heath: If the hon. Member has read our Note he will know that the proposed surface vessels would be warships in fact, in name, and in law—and both Notes make that perfectly plain.

Mr. P. Williams: Is my right hon. Friend aware of the British protest against British acceptance of any multilateral force—mixed-manned or whatever it may be—and that many of us think that the best thing is a national, sovereign contribution to the defence of the West?

Mr. Heath: I have over many years taken full note of the individual protests of my hon. Friends. I am fully aware of them.

LARGE-DIAMETER STEEL PIPES (EXPORT TO RUSSIA)

Mr. Warbey: asked the Lord Privy Seal if he will make a statement on the

official protest made by the West German Foreign Minister against the refusal of Her Majesty's Government to be bound by the North Atlantic Treaty Organisation decision on the export of large-diameter steel pipes to the Soviet Union.

Mr. Heath: The Federal German Government have made known to Her Majesty's Government their views on the export of large-diameter pipe to the Soviet Union on several occasions, though not as an official protest. Likewise, Her Majesty's Government have explained their position to the Federal German authorities, either through the North Atlantic Treaty Organisation or directly, both before and after the matter was discussed in the North Atlantic Treaty Organisation last year.

Mr. Warbey: Is the Lord Privy Seal aware that the German Foreign Secretary has twice called him a liar in public by saying that the British Government were bound, and knew that they were bound, by the N.A.T.O. decision? Will he now tell the House the whole truth about this secret decision, which ought never to have been secret? Was it a decision or a recommendation, and did Her Majesty's Government make clear their position that they would not be bound by it when it was made?

Mr. Heath: The hon. Gentleman is, as usual, completely misrepresenting the views of Herr Schröder; and this matter has been clearly stated to the House on many occasions.

Sir C. Osborne: Since West Germany is making strenuous efforts to increase her trade with the Soviets, is it reasonable to allow West Germany to play dog in the manger and prevent us from supplying these oil pipes in view of the fact that if we do not supply them the Soviets will themselves start to make them?

Mr. Heath: The Federal Republic have stopped, by their own action, the export of this piping to the Soviet Union. The question of increasing trade is, of course, a matter both for ourselves and the Federal German Republic in other matters. On this particular matter of large-diameter piping we have made our position quite clear.

NUCLEAR TESTS

Mr. Driberg: asked the Lord Privy Seal to what extent, in the course of the negotiations for a nuclear test ban agreement, the principal Powers concerned have modified their original estimates of the number of on-site inspections that would be, respectively, the minimum necessary and the maximum acceptable; if, in view of the progressive narrowing of the gap between these figures, he will renew his efforts to secure agreement before either of the Powers makes this more difficult by re-starting tests; and if, meanwhile, in the interest of securing agreement, he will urge both powers to refrain from further testing.

Mr. Dempsey: asked the Lord Privy Seal what progress has been made on the submission of proposals concerning the concept and the number of on-site inspections, presented by Her Majesty's Government at Geneva, with a view to agreement on a nuclear test ban treaty; and if he will make a statement.

Mr. Prentice: asked the Lord Privy Seal what scientific advice he has obtained about the number of on-site inspections needed on Soviet territory or elsewhere to provide a satisfactory basis for policing a nuclear test-ban treaty.

Mr. Heath: The Western draft treaty of 1961 provided for a quota of 20 on-site inspections a year. Shortly afterwards, the Western delegations offered to substitute a variable quota of between 12 and 20 inspections, depending on the number of unidentified seismic events on the territory of the other side. As a result of an intensive seismic research programme, the Western Powers were subsequently able to reduce their requirements to between eight and ten, and, last March, to seven, provided that the conditions under which these inspections were made were satisfactory. This takes full account of all the latest scientific advice available to us.
The Soviet Union, on the other hand, offered a maximum of two to three in 1960, withdrew this offer in 1961, and returned to it again in December, 1962. They have thus made no advance on their position of three years ago.
We are continuing our efforts to secure a Treaty and my right hon. Friend the Prime Minister and President Kennedy

have recently been in correspondence with Mr. Khrushchev on the question.

Mr. Driberg: Has the right hon. Gentleman noted, and welcomed, the statement given in evidence before a Senatorial Committee by a senior expert at the Pentagon that he would now be content with six or seven; but has he also noted the rather unfortunate coincidence that, on the very day on which President Kennedy said that a new round of testing would be a great disaster, the resumption of testing in Nevada was announced by the Atomic Energy Commission, including what appear to be some atmospheric tests, though the word is disguised under the euphemism of "surface" testing?

Mr. Heath: I have seen many such reports.

Mr. Speaker: Mr. Dempsey.

Mr. Driberg: Cannot the Lord Privy Seal make any comment?

Hon. Members: Order.

Mr. Dempsey: Will the Lord Privy Seal say what offer was made in the recent statement at Geneva—delivered, I understand, to the Soviet Ambassador—to try to bridge the gap between the Russians' suggested three on-site inspections and the West's seven inspections? Furthermore, can he say what effort has been made in this declaration to try to solve the problem of the concept of an inspection? Will not he agree that it is essential that we should try to arrive at some compromise between East and West to solve this problem?

Mr. Heath: I think that the very full Answer I have given demonstrates absolutely clearly to the House what steps the Western Powers have taken to move towards the Soviet Union's position while, at the same time, the Soviet Union has not moved in any way from the position it took in 1960. This is absolutely clear. From the point of view of dealing with the concept of inspection, we have on many occasions offered to have a full exchange of scientific information with the Soviet Union, which it has never accepted. We have offered on many occasions to discuss with the Russians their fear that inspection would lead to espionage, without the invitation being


accepted by them. I think, therefore, that the House will agree that the Western Powers have made a very large number of moves towards the Soviet position, and have offered many opportunities for the Soviet Union to clarify the rest, which have not been accepted.

Mr. Mayhew: Does the Lord Privy Seal recall that on Tuesday the Prime Minister stated that he was, in a day or two, expecting to agree some new initiative with President Kennedy? Can he give any information about this, and whether statements will be made?

Mr. Heath: I cannot give any information at present.

Mr. Prentice: How far does the right hon. Gentleman think that the present very narrow gap between the two sides is due to political reasons and how far to a different assessment of the scientific and technical date? If the latter is the explanation, is there not now a lot to be said for pushing the recent suggestion of Her Majesty's Government for the scientists of the two sides to meet, and should not that suggestion be renewed before there is another series of tests?

Mr. Heath: That invitation has been constantly made by both my hon. Friend the Minister of State and the American representative at Geneva, and it is an open invitation, but always the Soviet Government have made it perfectly clear that their view at the moment is that it is a purely political demonstration, and not based on scientific evidence.

Mr. P. Williams: Is it not reasonable to ask hon. Members opposite to be as persuasive with the Russians in order to try to get them to effect a compromise as they are with the Government?

Mr. Driberg: While fully accepting most of what the right hon. Gentleman said, and while urging him to be as persuasive with the Russians as with the Americans, may I also respectfully ask him not to brush aside contemptuously a perfectly serious question about the new round of tests in Nevada?

Mr. Heath: I am not brushing it aside. The hon. Gentleman made a number of statements of fact, and I said that I noted the comments to which he drew my attention.

Mr. Lubbock: asked the Lord Privy Seal if he will publish a White Paper setting out the reasoning on which the Western demand for seven on-site inspections is based, including an analysis of the seismic events which have occurred within the territory of the Union of Soviet Socialist Republics in recent years, showing the statistical connection between the number of events of doubtful origin and the number of inspections demanded assuming various numbers of unmanned seismic stations and differing selection procedures for the events to be inspected.

Mr. Heath: No, Sir. The demand for a particular number of inspections is based on a number of factors and data, not only scientific. Moreover, the scientific data cannot readily be presented in the form of a White Paper.

Mr. Lubbock: But as in answer to an earlier Question the Lord Privy Seal said that this was the very type of information that we had already offered to exchange with the Soviet Union, can he give any valid reason for refusing to do this on a unilateral basis? Does he appreciate that most ordinary people find it impossible to follow the niceties of the argument about whether there should be three or seven inspections, and that many of us believe that if the information were made available we should see that the insistence on seven inspections was unnecessary?

Mr. Heath: I cannot accept the hon. Gentleman's conclusion in his supplementary question at all. Certainly, the scientific data are immensely complex. Naturally, when we made the offer to the Soviet Union it was for an exchange of scientists to be able to discuss these aspects of the matter which are of concern to them.

Mr. Fletcher: Would the Lord Privy Seal at least say whether it is true, as reported in the Press on Sunday, that one of the reasons for the Government's attitude is that Soviet Russia is developing an anti-missile missile which can be tested only by means of underground experiments and that that is the reason why the Government want these inspections?

Mr. Speaker: Order. It is out of order to ask Ministers to comment on, confirm or deny propositions in the Press for which they are not responsible.

Mr. Lubbock: I appreciate that the scientific reasons for the demand for a certain number of inspections are extremely complex, but does not the right hon. Gentleman know that Members of the House of Commons and members of the public are just as capable of judging the reasoning as are members of the Cabinet or of the Government negotiating team? Why should we not be given this information?

Mr. Heath: I am fully ready to agree with the hon. Member. All I said was that the information was not readily available or appropriate to be published in the form of a White Paper.

Mr. Zilliacus: asked the Lord Privy Seal whether, in order to make it easier to reach agreement on a nuclear test-ban treaty, he will propose that the negotiating Powers should compose their remaining differences on the basis of the principle that a treaty banning all tests with imperfect means of monitoring minor underground explosions is a lesser evil than the continuation of tests.

Mr. Heath: No, Sir.

Mr. Zilliacus: I am not astonished at the reply. Does not the right hon. Gentleman agree that the real reason for the difficulties caused by these apparently narrow differences on issues of detail and technical matters both as regards nuclear tests and as regards disarmament stems from the underlying fear and suspicion? So long as both sides remain prisoners of military logic, each believing that the other will attack if it has the chance, I do not think that we shall ever get agreement. Should not we take the initiative in trying to break the psychological deadlock by drawing attention to the basic fact that minor underground tests can be detected if there is more than one of them and that the slight uncertainty about isolated explosions is a much smaller risk than the risk of having no nuclear test ban treaty at all?

Mr. Heath: If the hon. Gentleman is right that the trouble here is suspicion between the two sides, perhaps the Soviet Government will accept our invitation to

discuss the scientific aspects of this question together with any questions they care to raise about the possibility of espionage, so that we may put their fears at rest.

COUNCIL OF EUROPE (RECOMMENDATION)

Mr. Mayhew: asked the Lord Privy Seal what proposals Her Majesty's Government will place before the Committee of Ministers of the Council of Europe for implementing Resolution 327 of the Assembly of the Council, which calls for increased contacts, under the auspices of the Council, between the peoples of Eastern and Western Europe.

Mr. P. Thomas: I assume that the hon. Gentleman is referring to Recommendation 357. As he is aware, Her Majesty's Government are already taking steps to stimulate contacts with the peoples of Eastern Europe, to which they attach great importance. They welcome the interest shown in such contacts by the Consultative Assembly of the Council of Europe, and will consider sympathetically in the Committee of Ministers any proposals which would enable the Council usefully to supplement work being done in this field by individual member States.

Mr. Mayhew: Whilst I welcome that statement, and recognise that in this respect Britain is ahead of other members of the Council of Europe, may I ask whether we can have an undertaking that, on the Committee of Ministers, the British Government will not let this Recommendation just be noted or approved, but will press for specific action in the terms of the Recommendation in order to get something done?

Mr. Thomas: Her Majesty's Government are certainly extremely interested in this matter, as the hon. Gentleman knows, but I am not at present in a position to state what proposals, if any, Her Majesty's Government intend to place before the Committee of Ministers in this matter.

Mr. A. Lewis: Can hon. Members be advised how best to get into this "closed club" of delegates to the Council of Europe?

Mr. Thomas: I suggest that the hon. Gentleman should consult his Whip, if he has one.

BAHREIN, QATAR AND TRUCIAL STATES

Mr. Mayhew: asked the Lord Privy Seal what special privileges are exercised by Her Majesty's Government in Bahrein, Qatar and the Trucial States; at what dates these privileges were acquired; and what steps are being taken to modernise relationships with these sheikdoms.

Mr. Heath: Since the reply to the first two parts of this Question is long, I will, with permission, circulate it in the OFFICIAL REPORT. As for the third part, I have nothing to add to the reply which I gave to the hon. Gentleman on 25th March.

Mr. Mayhew: Would not the Lord Privy Seal agree that it may well be easier to maintain our interests in the Gulf, which are of great value to the people there, if our relations with the sheikdoms are brought more up to date and, if possible, made rather less obtrusive and dominating? How long do we intend to maintain British jurisdiction in this area, how long are our representatives to have the name and status of political agents, and how long do we intend to insist on monopolising all the foreign diplomatic contacts of those countries?

Mr. Heath: We are always ready to discuss changes in our relationship with the Rulers, as we did in the case of Kuwait, which led to the exchange of letters of 19th June, 1961, but no question has been raised by the other Rulers in the Gulf to alter their arrangements. As to jurisdiction, a process of hand-over is going on as their juridical processes are established. From the point of view of the remainder of the supplementary question, as long as the relationship is desired, and Her Majesty's Government feel it valuable to maintain it, these other matters will remain.

Following is the reply:

SUMMARY STATEMENT OF PRIVILEGES EXERCISED BY HER MAJESTY'S GOVERNMENT IN BAHRAIN, QATAR AND THE TRUCIAL STATES.

BAHRAIN

Perpetual Treaty of Peace and Friendship 1861. The Ruler undertook that "British Subjects of every denomination…may reside in and carry on their lawful trade in the territories of Bahrain…and in respect to the treatment of British Subjects and Dependants

they shall receive the treatment and consideration of the Subjects and Dependants of the most favoured people. All offences which they may commit, or which may be committed against them, shall be reserved for the decision of the British Resident."

Exclusive Agreements of 1880 and 1892. Under these Agreements the Ruler undertook respectively not to enter into negotiation or receive representatives from any other power and not to alienate territory without the consent of Her Majesty's Government.

Agreement regarding Oil, 1924. The Ruler undertook not to grant oil concessions without the approval of Her Majesty's Government.

QATAR

Treaty of 1916. Her Majesty's Government acquired privileges similar to those already existing in the Trucial States (see below), and the right to approve all monopolies, concessions, and cable-landing rights. British merchants are allowed to reside and trade in Qatar, and are guaranteed national treatment of their imports.

TRUCIAL STATES

Exclusive Agreements of 1892. These bound the Rulers not to negotiate with any other power, receive agents or alienate territory without the sanction of Her Majesty's Government.

Fujairah became a separate State in 1952, when its Ruler accepted all the Treaties to which the other Trucial Rulers were parties.

GENERAL

Her Majesty retained jurisdiction in all of these States over, broadly speaking, non-Muslims. This special British jurisdiction has grown up largely by "usage or sufferance" over a long period, and it is not practicable to define its growth by dates or individual undertakings. The full terms of the above and other Treaties with the Rulers can be found in "A Selection of Treaties, Engagements, and Sanads relating to India and neighbouring countries", compiled by C. U. Aitchison, of which there is a copy in the Library.

NORTH SEA BED

Mr. E. L. Mallalieu: asked the Lord Privy Seal how much of the North Sea bed comes within the jurisdiction of the United Kingdom under the Continental Shelf provisions of the 1958 Geneva conventions on the Law of the Sea; whether the sea-bed frontiers have been agreed with other North Sea riparian States; and what arrangements for royalties are being made in the event of oil deposits being found in the North Sea.

Mr. Heath: Demarcation of areas of the bed of the North Sea is governed by the provisions of Articles 1 and 6 of the 1958 Geneva Convention on the Continental Shelf, which has not yet entered into force. It is not possible at this stage


to say how much of the bed of the North Sea would be regarded as appertaining to the United Kingdom. There has been no argeement with other North Sea riparian States on these matters. The answer to the last part of the Question is: None, Sir; arrangements will be made as and when necessary.

Mr. Mallalieu: Can the Lord Privy Seal say on what basis an American company which is supposed to be searching for oil in the North Sea is likely to be able to exploit its findings, and if an American company can exploit findings of oil on the Continental Shelf in the North Sea, will not the Soviet Union equally be able to go into the Irish Sea and do the same? Would it not be a good thing if the United Nations were made the trustees for all these rights of exploitation by way of bringing in revenue to the United Nations and also in order to minimise the likelihood of disputes?

Mr. Heath: As I said, arrangements will have to be made as and when necessary. At the moment, however, we are awaiting ratification by the necessary number of countries—22—of the Geneva Convention. Eighteen countries have so far ratified it. When the requisite number is reached, the Convention will come into force and govern these maters.

Mr. Grimond: As a prominent European and, indeed, a Charlemagne Prizewinner, the right hon. Gentleman will be familiar with the system of udal law, and he will no doubt be aware that this system has an important bearing on rights over the bed of the sea and was guaranteed to Orkney and Shetland when they became part of Scotland. Can he explain how this matter will be affected by udal law?

Mr. Heath: No doubt it will be replaced by the 1958 Geneva Convention when it is fully ratified.

MEDITERRANEAN (NUCLEAR-FREE ZONE)

Mr. A. Henderson: asked the Lord Privy Seal whether he will state the policy of Her Majesty's Government with regard to the latest official Soviet Government proposal for the establishment of the Mediterranean as a nuclear-free zone.

Mr. Heath: Her Majesty's Government have no objection in principle to the formation of nuclear-free zones in certain areas, so long as such zones are set up voluntarily by the States concerned and the existing military balance is not disturbed. In the Mediterranean neither of these conditions would be met.

Mr. Henderson: Would it not be more realistic if we sought to prevent the spread of nuclear weapons to countries bordering on the Mediterranean sea rather than to declare the Mediterranean sea itself a non-nuclear zone? Will Her Majesty's Government intimate to the Soviet Government that they would willingly co-operate in seeking to prevent the spread of nuclear weapons to countries like Israel and the Arab States in that part of the Mediterranean?

Mr. Heath: It has long been our policy that we should try to prevent the spread of nuclear weapons in this way and particularly in the Middle East. I will certainly bear in mind what the right hon. and learned Gentleman has said in considering the reply to the Soviet Note.

Commander Courtney: Would my right hon. Friend also bear in mind perhaps drawing to the attention of the Soviet Government in this context the potential nuclear capacity of Soviet warships lent to the United Arab Republic?

Mr. Heath: Yes, Sir.

N.A.T.O. (NUCLEAR WEAPONS AND FORCES)

Mr. Swingler: asked the Lord Privy Seal what changes in the possession and control of nuclear weapons and forces will result from the agreements to which Her Majesty's Government consented at the recent North Atlantic Treaty Organisation Ministerial meeting; and what the effect of these will be on Her Majesty's Government's policy of opposing German control, or participation in control, of nuclear weapons and forces.

Mr. Heath: As stated in the communiqué, the North Atlantic Ministerial Council approved
arrangements for broader participation by officers of the North Atlantic Treat Organisation member countries in nuclear activities in Allied Command Europe and in co-ocrdination of operational planning at Omaha".


The arrangements for ownership and political control of nuclear weapons within the alliance remain as before. Operations of the V-bomber force will now be co-ordinated with the North Atlantic Treaty Organisation.

Mr. Swingler: Will the right hon. Gentleman say whether this is a policy of deliberately spreading the control of nuclear forces and weapons to countries which at the moment have not got nuclear forces and weapons; and, in particular, is not this a departure from the policy that he has stated at the Dispatch Box several times, that Her Majesty's Government would not agree to any West German participation in control of nuclear weapons and forces? Is it not involved in this policy that we shall concede German participation in control of nuclear weapons and forces?

Mr. Heath: I said in the substantive answer that the arrangements for ownership and political control of nuclear weapons within the alliance remain as before.

Mr. Swingler: Would the right hon. Gentleman then say what is the essence of this policy? What is the meaning to be attached, therefore, to this communiqué and all the talk about multilateral or multi-national forces—a N.A.T.O. deterrent?

Mr. Heath: Because, first of all, in the staff organisation of SACEUR there will be changes in which the international spread of the officers taking part under the Nuclear Deputy Commander will have greater participation. Secondly, because the countries of the alliance, through, we hope, an extension of the consultative arrangements created at Athens a year ago will have greater information and, therefore, participation in the arrangements for this control.

MIXED-MANNED SURFACE FLEET (POLARIS MISSILES)

Mr. Zilliacus: asked the Lord Privy Seal why the Government have now decided to become a party to the German-United States agreement about setting up a mixed-manned multilateral surface fleet armed with Polaris missiles.

Mr. Rankin: asked the Lord Privy Seal if, in the proposed mixed-manned

seaborne Polaris fleet, it is the intention that the supporting members will have the right of veto in the same way as the active members.

Mr. Shinwell: asked the Lord Privy Seal if he will make a statement about the announcement made by the Foreign Secretary at the North Atlantic Treaty Organisation conference at Ottawa that the United Kingdom accepts the principle of a mixed-manned force

Mr. Heath: The policy of Her Majesty's Government towards a mixed-manned North Atlantic Treaty Organisation nuclear force remains as previously stated to the House, namely we have given a general welcome to the concept but no agreement has been reached to establish such a force. No decisions have therefore been taken on particular questions such as its political control.

Mr. Zilliacus: Why have the Government, who originally took the same view of the military merits of this proposal as that so forcefully expressed by Lord Montgomery in another place, gone half way to yield to American political pressure exerted in order to appease the German desire for nuclear weapons? Is the right hon. Gentleman aware that in Bonn this concession is regarded as a first step to the achievement of equal rights in nuclear weapons? In view of what happened last time when we encouraged and connived at the rearmament and territorial ambitions of German nationalism and militarism in order to use Germany as a bulwark against Communism, will he please reconsider his position?

Mr. Heath: I do not accept the hon. Gentleman's interpretation of history, either ancient or modern. When this proposal was first put forward, my noble Friend the Foreign Secretary made a statement saying that we welcomed the concept, which enables the countries of the alliance to work more closely together; but the whole concept must be examined for its military, financial and economic implications. That is the Government's position.

Mr. Rankin: The right hon. Gentleman will have noted that in my Question I ask what is his intention. Does he approve of the idea of a crew on board a vessel, which will, in the event, continually be in danger, not having equal


rights? Should not the supporting members on the vessel have the same rights of decision as the active members, since they will be engaged in the same venture and their lives will be at the same hazard?

Mr. Heath: I answered the hon. Gentleman's Question by saying that, as no agreement has yet been reached to establish such a force, no decisions have been taken about particular points regarding control such as he raises.

Mr. Shinwell: Does not the right hon. Gentleman appreciate that his reference to the N.A.T.O. countries working more closely together in the military sphere is quite irrelevant to this new concept which has been welcomed by the Foreign Secretary? The N.A.T.O. countries work together at present. This concept is something quite different. Did the Foreign Secretary, on behalf of Her Majesty's Government, before accepting this new concept in principle, consider its practicability and the expense which is likely to be entailed? May we have an assurance that, before the principle is adopted in practice, the House will be fully consulted?

Mr. Heath: The form in which statements were made at the time not only in the other place but to this House expressed our views about the concept. I still maintain that it is a concept which allows these countries to work more closely together. We have said specifically that the next step is for all the implications to be examined, and this process is going on. The House will, of course, be kept informed about it.

Sir A. V. Harvey: Will my right hon. Friend note that some of us on this side of the House are highly alarmed at the prospects of this arrangement? Will he take into account that in any discussions there must be no question of paying lip-service but we must be absolutely frank on this unpractical proposition?

Mr. Heath: Yes, Sir; I am sure that my hon. Friend, as he always does, will wish to consider the matter fully and carefully and form a balanced judgment when all the information is available.

Mr. Mayhew: In view of the great concern on both sides of the House about this and the fact that no decisions have

been taken on almost all the important questions of control, cost and practicability, is it not a little early to invite over here a naval mission headed by the United States vice-chief of naval operations?

Mr. Heath: No, Sir; I should have thought that that was exactly what was required at this moment so that the details of the matter could be discussed. It is, after all, an American proposal on which the American Administration have been working. It is, therefore, natural that we should wish to discuss all the details with them before any decisions can possibly be reached.

Mr. Shinwell: I do as I did the other day, Mr. Speaker, that is, I announce that, failing an official debate on this subject, I intend to raise the matter at the earliest opportunity on the Adjournment.

PRESIDENT TSHOMBE (BODYGUARD)

Mr. Biggs-Davison: asked the Lord Privy Seal why, despite assurances that President Tshombe would continue to be protected by the Katanga gendarmerie, United Nations forces assisted Central Congolese troops to disarm the President's bodyguard.

Mr. P. Thomas: Mr. Tshombe's palace guards have been replaced by 15 Katanga civil police, who will be armed when on duty.

Mr. Biggs-Davison: Why were two British consular cars interfered with in the course of this operation and one British subject arrested?

Mr. Thomas: I regret that I have no information about that at the moment. I will find out about it and let my hon. Friend know.

NORTH ATLANTIC COUNCIL (OTTAWA MEETING)

Mr. Biggs-Davison: asked the Lord Privy Seal whether he will make a statement about the Ottawa meeting of the North Atlantic Council, with particular reference to the United States proposal for a multilateral or mixed-manned Polaris surface fleet.

Mr. Frank Allaun: asked the Lord Privy Seal if he will make a statement about the North Atlantic Council meeting at Ottawa.

Mr. Rankin: asked the Lord Privy Seal if he will make a statement on the decisions reached at the Ottawa meeting of the North Atlantic Treaty Organisation.

Mr. Heath: The main result of the Meeting was that the Council approved the steps taken to organise the nuclear forces of the Alliance, on the lines foreshadowed in paragraph 6 of the Nassau communiqué. This means in practice the creation of an inter-allied nuclear force, to include the British V-bomber force, whose formal assignment to the North Atlantic Treaty Organisation was notified during the meeting, and three United States Polaris submarines as well as other nuclear delivery units already assigned to the Supreme Allied Commander Europe.
The arrangements approved by the Council will increase the effectiveness of the nuclear striking power directly available to the North Atlantic Treaty Organisation and will give member Governments a greater part in the day-to-day management of the North Atlantic Treaty Organisation nuclear forces in decisions on nuclear defence policy.
The Council also reviewed the political situation facing the Alliance. I will, with permission, circulate the text of the communiqué in the OFFICIAL REPORT.

Mr. Biggs Davison: Was it at this conference that a general welcome was accorded to the proposed multilateral surface force? Would it not be franker and better for Anglo-American relations if Her Majesty's Government now withdrew this general welcome to something which we cannot afford, which cannot work, and which is detrimental to Her Majesty's Government's own policy with regard to the independent nuclear deterrent? Further, was any proposal of this kind ever envisaged at the Bahamas Conference?

Mr. Heath: The subject discussed at the N.A.T.O. meeting in Ottawa was the inter-allied nuclear force. There was no full discussion of the multilateral force, because that was not the purpose of the meeting, it still being under examination by the various countries concerned. I

hope that my hon. Friend, too, will be prepared to form his judgment when the examinations have been completed.

Mr. Allaun: Will the Government undertake to publish the details in a White Paper? Is it not true that Bonn has offered to contribute 40 per cent. of the cost and of crews of this fleet? Does not this eagerness spread from the belief in West Germany that this will be a major step towards its becoming a nuclear Power?

Mr. Heath: I am not sure for what details the hon. Gentleman is asking. The details which were agreed on at Ottawa have already been published in the N.A.T.O. communiqué. As regards the multilateral force, I understand that the German Government have indicated their general support, but any question of the total of their contribution is a matter to be negotiated.

Mr. Rankin: In the report, the Ministers welcomed the measures taken at Ottawa to increase the effectiveness of nuclear capability. Does the right hon. Gentleman realise that the United States already has an over-kill capacity which absolutely baffles human imagination? Does not he think that, if the Ministers were to reconsider that paragraph, they could also think of the point they might be expected to reach when they could say that they were thinking in terms of a reduction instead of a further increase?

Mr. Heath: I should have thought that our efforts at Geneva to reach an agreement on disarmament were sufficient proof of our interest in the desirability of a reduction in armaments.

Commander Courtney: Would not it have been much wiser if the British Government had voiced the obvious technical objection to this proposal before it went to Ottawa and so avoided putting us in a position where a N.A.T.O. decision has been made and we have to make our own separate decision afterwards?

Mr. Heath: I do not think my hon. and gallant Friend has quite understood the position. No decision was taken at Ottawa about the multilateral force. The decision taken was about the inter-allied force, which was the result of paragraph 6 of the Nassau Agreement. General


agreement was reached between the members of the alliance on this point. There was no decision—and it was not a major item of the discussion—about the multilateral or mixed-manned force. That is still being investigated by those countries which are interested.

Mr. Grimond: In their thinking about the multilateral force, are the Government considering this as an alternative or as an addition to the British independent nuclear deterrent? Also, can the right hon. Gentleman say whether the Government are considering whether it could be controlled by anyone else except the Americans ultimately?

Mr. Heath: It is being considered as an addition to the existing nuclear arrangements. The matters of control still remain to be discussed both with the American Administration and with the other Governments which are interested.

Dame Irene Ward: Will my right hon. Friend convey to the Prime Minister the warning from this side of the House that he should not go too quickly in this matter?

Mr. Heath: If I understand my hon. Friend aright, as I have sometimes tried to do in the past, she means that we should give it most careful consideration and a full examination. I assure her that we will do that, but I have sometimes noted in the past that her emphasis is rather more on haste than on delay.

Following is the communiqué:
The North Atlantic Council met in Ministerial session in Ottawa from 22nd to 24th May, 1963.
2. In their review of the international situation, Ministers emphasised that in the world of today peace is indivisible. The enduring character of the North Atlantic Alliance, founded on the principles of inter-dependence and common defence, constitutes a basic guarantee for the maintenance of peace.
3. The Council noted with regret that the Soviet Union had so far shown little interest in seeking equitable solutions for outstanding problems.
4. With regard to Germany and Berlin, the threat has not disappeared. Thanks to the firm attitude maintained by the West, however, developments detrimental to the interests of Berlin and the Alliance have been effectively discouraged. In this connection, the Alliance abides by the terms of its Declaration of 16th December, 1958, on Berlin.
5. Outside the treaty area too, tensions and difficulties continue to exist which have

profound effect on the Alliance, Soviet military personnel remain in Cuba—and the situation there, with its repercussions in the region generally, still gives cause for concern. Ministers also expressed their disquiet over recent events in Laos, and stressed the importance of sustained efforts to secure respect for the Geneva Agreements.
6. Ministers reaffirmed the importance, in building a peaceful world, or progress towards general and complete disarmament by stages and under effective international control. In this connection, they noted that agreement in principle had been reached between the United States arid the U.S.S.R. on measures to improve communications designed to reduce the risk of war by accident or miscalculation. They expressed the hope that the Soviet Union's attitude would evolve sufficiently to permit genuine progress to be made on key disarmament questions.
7. The growing scope and complexity of the problems facing the Alliance make it imperative for the Council to ensure that its political consultations arc as prompt and effective as they can be made. Ministers noted the progress already achieved in this direction and expressed their determination to secure still further improvements.
8. Ministers discussed N.A.T.O. defence policy and approved the steps taken to organise the nuclear forces assigned or to be assigned to the Supreme Allied Commander Europe (SACEUR).
These include notably:

(a) assignment of the United Kingdom V-Bomber force and three United States Polaris submarines to SACEUR;
(b) establishment by SACEUR on his staff of a deputy responsible to him for nuclear affairs;
(c) arrangements for broader participation by officers of N.A.T.O. member countries in nuclear activities in Allied Command Europe and in co-ordination of operational planning at Omaha;
(d) fuller information to national authorities both political and military.

Ministers welcomed these measures to increase the effectiveness of the nuclear capability at the disposal of the Alliance and to improve co-ordination and control of its nuclear deterrent forces.
9. Ministers recognised the need to achieve a satisfactory balance between nuclear and conventional arms. They directed the Council in permanent session to undertake, with the advice of the N.A.T.O. military authorities, further studies of the inter-related questions of strategy. force requirements and the resources available to meet them.
10. The Council noted progress made in the implementation of earlier resolutions concerning the defence problems of Greece and reaffirmed its interest in the effective application of these resolutions.
11. The North Atlantic Alliance seeks peace. It deplores the diversion into the military field of resources which might be used for the betterment of mankind, and in particular for increased efforts to raise living standards


in developing countries. But the free world remains faced with a continuing threat that members of the North Atlantic Alliance have both the right and the duty to protect their freedom and independence.
12. The next Ministerial meeting will be held in Paris in December, 1963.

SUGAR PRICES

The following Questions stood upon the Order Paper:

Mr. AWBERY: To ask the Minister of Agriculture, Fisheries and Food if he is aware that the price of sugar has gone up over 40 per cent. since Christmas and is now at its highest; and if he will seek power to control the price.

Mr. FARR: To ask the Minister of Agriculture, Fisheries and Food what new steps he is taking to increase sugar production in the United Kingdom.

Mr. MCBRIDE: To ask the Minister of Agriculture, Fisheries and Food if he will institute an inquiry into the price of sugar in this country.

The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames): With your permission, Mr. Speaker, and that of the House, I will now answer Questions Nos. 43, 46 and 48.
During the first four months of this year, the world price of raw sugar rose by 75 per cent., from £40 to £70 per ton. Throughout this period we have been adjusting the surcharge at home. This is a charge levied by the Sugar Board to make up the difference between the fixed price at which we buy sugar from producers here and in the Commonwealth, and the normally much lower world price.
As a result of the action which we have been taking to reduce and finally to eliminate the surcharge, we were able, in spite of the rising world price, to keep the price of sugar in this country very steady up to the end of April.
This month, the world price began a new and increasingly steep rise, and this has begun to be reflected in retail prices. As a result of the high price of sugar, profits have accrued to the Sugar Board. As from midnight tonight, the Sugar Board will start distribution payments at a rate of 6d. a lb. of refined sugar to pay back these profits. This will offset the rise in world prices and will make

it possible for retail prices to be restored to their normal levels, and will make it unnecessary for prices of such things as jam and sweets to go up.
In order to remove the risk of serious abuse of these arrangements, the Board of Trade will be controlling the export of those sugar and sugar-containing goods on which the Sugar Board have no power to recover distribution payments.
These arrangements will mean that our supplies of sugar, which are completely adequate for our needs, will be available at normal prices to consumers and manufacturers.

Mr. Farr: In thanking my right hon. Friend for his statement in reply to the Questions, may I ask whether he has considered making this year a non-quota year for British sugar producers? There is an estimated shortfall of about 1 million tons in world sugar production for this year and I should have thought that possibly it was not too late to let British farmers take additional steps to make up some of this shortage.

Mr. Soames: First, we have no idea what the world price of sugar will be at the time when any future crop is harvested. Secondly, there is plenty of sugar in this country for our needs. Supplies under the Commonwealth Sugar Agreement, combined with those resulting from the acreage quotas for the growing of sugar here, amount to 90 per cent. or even more of our total sugar requirements.
The difficulty has not been any shortage of sugar in this country. This rise in world prices has been the reflection of a marginal shortage elsewhere in the world. It would not be a good solution to raise our acreage quotas for home sugar producers at a time when the price was high and to drop them when the price was low. I think that the arrangements which keep the flow of sugar into this country steady are the right ones.

Mr. McBride: In thanking the Minister for his statement, may I ask whether he is aware of the great anger felt by the housewives of Britain at the rise in price of this commodity? In West Germany an allotment from the Government has pegged the price of 1s. Id. a 1b. Is the Minister further aware that


in Mincing Lane last Thursday as reported in the Guardian, the Daily Telegraph and the Daily Express, all newspapers which favour hon. Members opposite, an anonymous spokesman said:
What is all the fuss about? It will be all right in the end.
Surely someone made something out of this. Surely the Minister owes it to Britain to inquire into the reasons for the sudden steep rise in price in this commodity.

Mr. Soames: I do not think that the hon. Gentleman has got the facts quite right. Thanks to our arrangements on the importation of sugar, when the world price rose from £40 to £70 in three months, that rise was not reflected in the shops at all. That was up to the end of April. Only during the month of May, and principally during the last two or three weeks, when there was a very sudden increase from £70 to £100, which has gone back in the last couple of days, has this rise been reflected in the shops. In other words, the British housewife has been cushioned from the general rise in world prices, except in the last fortnight. Therefore, action had to be taken. We are now taking the action, and I believe that the housewives will be getting a very good deal from our sugar arrangements.

Mr. Peter Emery: How will this affect exports? I think specifically of industries which have to use a great deal of sugar in the production of biscuits and sweets. Will they be able to maintain their present prices in their export markets?

Mr. Soames: Yes, Sir. This will not interfere at all with our exports of sugar or goods containing sugar. What the arrangement will do is to ensure that people cannot buy sugar in this country at the Commonwealth Sugar Agreement price of around £45 or £46 a ton and then re-export it, without doing anything to it, at the world price of around £90 or £100 a ton. This will not affect our ability to export.

Mr. Peart: The right hon. Gentleman mentioned payments by the Sugar Board and the rebate of 6d. a 1b., which will go to the refiners. Can the Minister

assure us that this will be passed on immediately to the consumers in toto? Has he had that assurance from the refiners?

Mr. Soames: There is an agreement with the refiners, which, I think, dates back to 1956, that any surcharge or any distribution payment will be reflected in the ex-refiner's price. So this assurance can be given.

Mr. Grimond: When the Minister has made these arrangements about which he has told us, will they enable quicker action to be taken should there be another steep rise in the world price? Secondly, do these arrangements involve action by this House? Do we have to give the right hon. Gentleman any power or pass any Orders?

Mr. Soames: I will lay an Order today which will enable a distribution payment of 6d. to be made by the Sugar Board. If the world price were to rise further and we wished to increase the distribution payment, or, alternatively, if it were to fall and we wished to lessen it, this could be done by a further Order.
As to the powers which should be given by the House to the Government, the Orders which I have laid will be subject to the negative Resolution procedure.

Sir C. Osborne: On the wider issue, does it not smack somewhat of humbug for the House to complain about the rise in the world price of sugar when the people who supply it to us from the West Indies have a standard of living which is only one-half or one-quarter of ours? We wish to improve their standard of living and the only way we can do it is by paying more for what they send us. Is this not sheer humbug, therefore, when they are trying to earn an honest living?

Mr. Soames: Many Commonwealth countries will be getting advantage from the higher world price which is ruling today. As to the sugar which they sell to this country under the Commonwealth Sugar Agreement, normally the world price is below the Commonwealth Sugar Agreement price and they benefit. At times when the world price is high, this country gets the benefit.

ROYAL DOCKYARDS

The following Question stood upon the Order Paper:

Mr. CRITCHLEY: To ask the Civil Lord of the Admiralty whether he will make a statement about the future load of work on the Royal Dockyards.

The Civil Lord of the Admiralty (Mr. John Hay): With permission I will now answer Question No. 60.
The Admiralty is at present engaged on an examination of the expected workload on all the Royal dockyards for the next year or so. So far as Rosyth is concerned, it has already been announced that this dockyard is being developed for refitting nuclear submarines and is to be ready for emergency work in 1965 and for planned refits as soon as possible thereafter. There is no question of any reduction of the work-load there.
The work-load on the three southern dockyards is, however, affected by the completion next year of the modernisation of H.M.S. "Eagle" and the conversion of H.M.S. "Triumph". No new single tasks of comparable magnitude remain to follow. Some classes of refit work are likely to increase to offset the decline in modernisations and conversions, but it is not yet possible to estimate exactly what the load on each of the individual dockyards will be.
Apart from the overall effect of any changes in the work-load, there may be some imbalance between trades. But the order of magnitude of the problem is such that we expect normal wastage, the adjustment of overtime, a fall in the number of men employed over 65 and restriction of adult entry to go a long way towards its solution. It is not possible at this stage to say whether, in addition, any actual discharges on redundancy will be required. This possibility cannot be excluded, but it is already clear that large-scale discharges will not be necessary.
As soon as our examination has reached a sufficiently advanced stage, the trade unions will be brought into consultation.

Mr. Critchley: In thanking my hon. Friend for his statement, may I ask whether he is prepared to give an assurance that he will work with the unions

throughout the whole of the arrangements that he will have to make during the next eighteen months or so, so that the arrangements may be made as smoothly as possible and the number of people who may have ultimately to lose their jobs will be as few as possible?

Mr. Hay: Yes, Sir, I certainly give that assurance. We have admirable machinery for consultation with the unions, both at national level and in the yards. We will certainly bring them fully into consultation on this problem.

Mr. Willis: What exactly does the statement mean in terms of jobs? How many jobs are to be lost at each dockyard?

Mr. Hay: I cannot yet give any precise forecast. It would be not only unwise, but misleading, if I tried to do so. When our examination has gone a little further, we should be able to reach some idea of the figures. Then, as I have said in my Answer, we shall seek to bring the unions into consultation over the whole matter.

Miss Vickers: In view of the geographical position of Devonport Dockyard and the fact that the City of Plymouth has been dependent on the yard for 300 years, can my hon. Friend assure us that he will give adequate notice of any change so that we may try to become a development district, because it will be particularly difficult to get other industries to take up work there?

Mr. Hay: I hope that action of that kind will not be necessary. As I hope I have made clear in my Answer, this is a limited problem. We do not foresee any large-scale discharges. But certainly, as soon as we are in a position to say anything further, we will, of course, wish to do so.

Mr. Awbery: Is the Minister aware that the island of Malta depends almost entirely upon its dockyard? Can he give an assurance that there will not be a large number of redundancies in the dockyard there, where things have become so serious in the past few years?

Mr. Hay: No, Sir. My Answer is confined solely to the Royal dockyards in this country.

Mr. Burden: Is my hon. Friend aware that many informed people, quite apart


from those connected with the dockyards, are convinced that it is neither wise, desirable nor necessary to reduce the labour complement in the Royal dockyards at this time in view of the closure of overseas dockyards, the closure of Sheerness and the absolute necessity of maintaining a British Fleet big enough to ensure the free passage of our shipping throughout the world, to which the Polaris programme in no way contributes?
Secondly, will my hon. Friend bear in mind that workers in the Royal dockyards are paid much less for comparable jobs than workers in private yards? Will he urgently consider the question of an examination of the whole wages structure in the Royal dockyards?

Mr. Hay: The answer to the first part of that question is, "Yes, Sir". As to the second part, I understand that wage negotiations are in train over the whole of this field.

Mr. W. Hamilton: Does the Minister recognise that Fife will be gratified that there is to be no run-down at Rosyth? Can he, however, tell the House whether he had any consultations with hon. Members on his side of the House many weeks ago on this problem and that redundancy figures were leaked to the Press, and that it was considerable pressure by hon. Members opposite who represent dockyards that compelled the Minister to revise his policy on this matter? Can he confirm or deny those allegations?

Mr. Hay: As to the first part of the question, I am pleased to know that the position of Rosyth gives satisfaction in Fife. In reply to the second part, the hon. Member should not believe everything that he reads in the newspapers.

Dr. Bennett: While many people will, I am sure, be greatly relieved to hear that what has appeared to be some sort of sentence has been largely mitigated by a firm statement, may I ask that, while we hope that there will be no question of development districts in the dockyard ports, if there is to be a net reduction in the labour force my hon. Friend will keep in the closest touch with his right hon. Friend the President of the Board of Trade so that industrial development

certificates may be encouraged to be awarded should that be necessary?

Mr. Hay: Yes, Sir. My right hon. Friend the President of the Board of Trade and my noble Friend work in complete harmony in these matters, as always.

SHIPBUILDING (LOANS TO SHIPOWNERS)

The following Questions stood upon the Order Paper:

Dame IRENE WARD: To ask the Minister of Transport whether he will now make a statement on proposals to help shipping and shipbuilding.

Mr. P. WILLIAMS: To ask the Minister of Transport whether, in view of the current threat to employment in the shipbuilding industry, he will now make a statement about the Government's proposals on this matter.

The Minister of Transport (Mr. Ernest Marples): With permission, I should like to answer Questions Nos. 82 and 84.
The Government have been regarding the extent of unemployment in the shipbuilding industry with increasing concern, particularly since it is mainly concentrated in development districts. The world's shipbuilding capacity is now far too large for normal demand. There will have to be some contraction, from which our shipbuilders cannot expect to escape altogether.
But the immediate situation is worse, because in recent years ships have been built faster than world seaborne trade has grown. So our shipbuilders have been faced with a trough in demand which has brought their order books very low. Although recovery must come, there are few signs of it yet.
Therefore, the Government have been anxiously considering whether there are any special steps which they might take to help. Shipbuilders have been hit by the low rate of ordering by British ship-owners, and this feature has been particularly in our minds. We considered a scrap-and-build scheme. But no matter how it was administered, this would really be a subsidy for the shipbuilding industry, and subsidy is a course to avoid if at all possible.
Moreover, the British mechant fleet is one of the most modern in the world; and British ships are already being scrapped at a satisfactory rate. For these and other reasons, we think that a scrap-and-build scheme would not be appropriate.
The Government have decided, instead, to make funds available for a strictly limited period at Government lending rates for financing new orders for British shipyards.
The loans will be made to shipowners, and the terms of the loans will be decided on the advice of an Advisory Committee which I am setting up under the chairmanship of Lord Piercy. Lord Piercy is the Chairman of the Ship Mortgage Finance Company, and he has agreed that the experienced staff of this company may be put at the disposal of the Committee in the handling and investigation of applications.
The Government are prepared to make £30 million available for financing new orders. We shall consider raising this limit if experience shows that it would be right to do so. But the scheme will not, in any case, continue beyond 31st May, 1964. We contemplate that individual loans might be for periods of up to a maximum of 10 years. The lending rate based on Government credit for loans of from five to 10 years repayable by instalments is at present 5 per cent.
The Government will be prepared to make loans available in suitable cases for up to 80 per cent. of the cost of a ship. But the terms of each loan will be decided on merits, including, of course, the creditworthiness of the applicant. The scheme will apply to orders from British shipowners. Special facilities are already available for export credits.
I hope that this scheme will make a real contribution to the problems of British shipyards at this difficult time.

Dame Irene Ward: While thanking my right hon. Friend very much for having thought out these practical steps which. I think, he needs no assurance will be very welcome indeed, may I ask my right hon. Friend whether this new scheme has been thought out in consultation with British shipbuilders and owners? In view of what he said about the increase of merchant fleets throughout the world and the general problem of

shipping, has he anything to say about the problems which will arise from this, in view of the fact that it is not only shipbuilding which is the problem but the operation of the merchant fleet throughout the world to full capacity and in really competitive terms with other countries which subsidise both their shipbuilding and shipping interests?

Mr. Marples: I am grateful for my hon. Friend's support of this scheme.
As for the scheme being worked out in consultation with British shipbuilders and owners, the answer is "No", because we felt that the House should know the scheme first. We shall, of course, be consulting them straight away, but from negotiations which go on normally between my Department and the shipowners and shipbuilders we have a fairly good idea of what they have in mind.
As far as the general position is concerned, this is a worldwide problem, because the capacity of the world's shipbuilding far exceeds the rate of demand for world shipping, and it is aggravated by the subsidies given by certain countries. Of the leading shipbuilding countries, France, Italy and the United States are the principal ones which give shipbuilding subsidies. The first two will be eliminated in due course under the Common Market negotiations.

Mr. P. Williams: Will my right hon. Friend accept my congratulations on getting back from the opening of the motorway in time to make this statement? Will he help the House to put the whole matter in the right perspective? When we compare British shipbuilding costs with those of foreign nations we must take into account the fact that foreign nations subsidise their building to a very large extent, and, therefore, there is a great deal of uninformed and unfortunate criticism in this country of the British shipbuilding industry?
Will he also accept that most of us, on this side, at any rate, would also support him in rejecting subsidy? Can he tell the House what sorts of types of ships he expects to be disposed of and replaced in the work of Lord Piercy's Committee? Can he tell us whether he envisages British shipowners getting the same credit facilities as are given to foreign owners at present? Finally, if the scheme envisages legislation, how soon shall we get it?

Mr. Marples: In answer to my hon. Friend's last question, legislation will be needed, but I am advised that the scheme can be started now. There are precedents for that, so the scheme will start straight away. It will apply to ships of 100 tons and over, but will exclude fishing vessels because they are covered by the White Fish Authority and the Herring Industry Board, which administers schemes for fishing.
As far as subsidies are concerned, I think that our principal competitors, such as Japan and Sweden, do not have subsidies, but it is clear that they have been quoting prices which are under actual costs and are unrealistic. Therefore, to that extent, of course, they will be making losses. Japan is extremely concerned at the present trend in prices.

Mr. Willey: Is the right hon. Gentleman aware that, as far as it goes, this scheme is welcome? We welcome any step which will improve the position of British shipowners putting orders into British yards. But does he realise that this does not seem to match present requirements? British shipyards are facing a few—if we take an optimistic view—very crucial years, and if they are to get through those years much more than this will have to be done? We want to encourage new types of ships and reorganisation of construction.
I noticed that the right hon. Gentleman referred to contraction, but he said nothing, about alternative work. We do not want contraction at the further expense of shipyard employees. I think that he has to take a much wider view of the industry and much more constructive action if the industry is to get through the next immediate and very difficult years.

Mr. Marples: There was one supplementary question which my hon. Friend the Member for Sunderland, South (Mr. P. Williams) asked, which I did not answer, about credit facilities. I think that this will mean that the British owners will have credit facilities better than or at least as good as the facilities given to foreigners who wish to buy in this country.
In reply to the first part of the supplementary question by the hon. Member for Sunderland, North (Mr. Willey), I think that it is much too early to say that this scheme will not provide the

relief which is wanted. It is difficult to estimate quite what relief it will give. All I can say is that British shipbuilders have continually complained that British shipowners do not have the necessary credit terms to encourage or induce them to order ships. This will provide that inducement, and if it does bring orders to our shipbuilding yards it will be welcomed in some of the development districts.

Mr. Shinwell: Was the right hon. Gentleman serious when, in reply to one of his hon. Friends on the other side of the House, he said that so far he has had no consultations with either shipbuilders or shipowners on the proposed scheme because he wanted to make an announcement to the House? Was it not possible, before making the announcement, to have some preliminary discussions with those primarily concerned? How does he know what type of ships are required? How does he know what credit facilities are required?
Is the right hon. Gentleman not aware, on the basis of his own statement, that the supply of ships is far in excess of the demand and that the only way of dealing with this problem, apart from extended credit facilities, is that followed in other shipbuilding countries, for example, in Japan'? Recently, in connection with the building of a tanker for a large firm in this country, it was said that nothing but a scrap and build policy would be of any avail.
Is he also aware that the Court Line recently sold seven ships to a foreign country instead of scrapping those ships, and that they are to he in competition with this country? When will he face the inescapable fact that unless we dispose of a great many of our obsolete ships, some of them 15 and 20 years old, and of a speed which makes them no longer of competitive value against the ships of many maritime nations, we shall not solve this problem?

Mr. Marples: Scrap and build is really a direct subsidy. The shipbuilders did not want that. They wanted owners to be given an inducement to order more. We have now given that. The credit we are now giving covers all types of ships. It is not just one type, and it does not depend on whether it is an advanced type or whether it is a dry cargo vessel or a tanker.
The credit is given on the best terms the Government can possibly give to any institution in this country, at the lowest rates of interest at which anybody can borrow. Therefore, it ought to be a great inducement to shipowners to order British ships. While I know that this is a world problem, this is specifically intended to help our shipbuilders in development districts. I think that it will do so.

Mr. P. Browne: Is my right hon. Friend aware that the biggest employer in one part of my constituency—the

Appledore shipyard—closed down overnight recently, and that we have had difficulty in getting it going again? Does he further agree that one of the reasons why these smaller firms are hanging on by their eyebrows is the contraction in the coastal fleet? Will he not pay more attention to this important part of our transport system?

Mr. Marples: I cannot agree with my hon. Friend. What has happened is that, in view of the scarcity of orders in the world, the bigger yards are now going in for the smaller ships, which they did not do before.

FOOD IMPORTS

4.2 p.m.

Mr. Speaker: Before I call the hon. and gallant Member for Eye (Sir H. Harrison) to move his Motion, it may be convenient to the House if I indicate that the Amendment to the Motion, in the name of the hon. Member for East Ham, South (Mr. Oram), at the end to add:


That this House welcomes the decision of Her Majesty's Government to use measures of control of certain imports of foodstuffs as a means of stabilising the market for agricultural products in this country.


Although a back bencher may be fortunate in drawing first place to move a Motion from time to time on a Friday, it is only twice a year that he can be fortunate enough, by choosing a lucky number, to open a debate at 3.30 p.m. [HON. MEMBERS "Four o'clock." When this good fortune happened to me on 14th May I had no doubt that the right subject for me to raise, both in the national interest and in the interests of the agricultural industry, in which so many of my constituents are engaged, was one dealing with the necessity for a greater control of the imports of foodstuffs. This was a Motion calling for a big change in Government policy.
It must be unique in the annals of this House that I should have received a reply to my Motion and, what is more, have had it accepted in principle by the Minister of Agriculture a week before I was able to move it. This was due to the fact that the Opposition, at short notice, took a Supply day to debate agriculture—an opportunity which they had had for many weeks. I tried to discover whether a back bencher was in any way protected by the law of anticipation but, searching through Erskine May, I found, according to pages 403 and 404, that once more the powers of the Front Benches were too strong, and that as the debate was on a Supply day, in Committee, it had priority over mine.
However, no vote was taken last week on the control of imports. Therefore I have extended my Motion to cover a wider field than it covered originally, because I wanted it to be carried and recorded that this House approves the new policy announced by Her Majesty's Government last week. In my view, in spite of last week's welcome announce-

provided that domestic consumers are not prevented from obtaining reasonable price advantages from the increasing productivity and abundance of agriculture at home and overseas, and provided also that overseas primary producers are not deprived unduly of the means of paying for British industrial goods
is not selected.

Colonel Sir Harwood Harrison (Eye): I beg to move,
ment, this debate is still opportune, since it enables us to discuss some of the detail which was, naturally, omitted last week.
I am delighted to know that my right Friend the President of the Board of Trade will be taking part in the debate, because much of the detailed administration of these controls will lie in the hands of his Department. He is often regarded in agricultural circles as the nigger in the woodpile, but I wish that some of my agricultural friends could see how clean and charming a person he is in the flesh. I suggest that he soon speaks to a large gathering of farmers. If he finds that leaders in other industries and businesses try to stop him carrying out this policy, I suggest that he consults his Parliamentary Private Secretary, my hon. Friend the Member for Lowestoft (Mr. Prior). If he follows his advice on farming matters he will be very wise.
The reason that I have chosen this subject for debate is that for some months it has been clear to me that in the interests of our farming community—which wants stable prices—and certainly in the interests of the consumer, or taxpayer, there must be some control on the excessive import of foodstuffs.
When the 1947 Act was passed—and, to a lesser degree, the 1957 Act—we still needed a large quantity of food from the Commonwealth and foreign countries, many of whom were then short of food themselves. The world situation is very different today. There are large surpluses in many countries. We are one of the last free markets left, and it is not unnatural that countries should look to see what they can unload on us. It is that extra amount that is coming on to our market that has upset both supplies from home producers and also prices.
At the end of last year I met the leaders of the Suffolk Branch of the National Farmers' Union and told them that I, at least, was converted—as I thought many of my hon. Friends were —to the necessity of a policy of import control. At that time the Government were still negotiating in an endeavour to enter the Common Market. It may be argued that they were not at that time paying sufficient attention to the needs of our farmers. Grave concern for the future has been expressed during the year, but the quick change of policy announced last week should restore confidence. Farmers were, naturally, angry at the increase in beef imports, which forced down the prices of the home product, although they were still getting the benefit of the guarantee under the 1957 Act.
It appeared that the Government were reacting slowly. It must be realised that in a democracy it is usually natural for a Government to react slowly, until public opinion is expressed. Farmers are critical of the dumping of foreign produce at low prices, and although the antidumping legislation has achieved much, its machinery is cumbersome. Often the threat of its use has been successful in preventing imports, but this is negative.
Farmers were shaken when it looked at one time as though a contract for the supply of liquid milk to an American air base in East Anglia would go to a Dutch firm. We have consistently had imports of Polish eggs at inopportune moments, and there is a strong feeling that the Danes are getting more than their fair share of the bacon market. While the farmers' price is controlled, to a large degree, any extra costs incurred by the middleman are automatically passed on to the consumer. A few days ago the cost of producing bread rose. It may have been due to a wage increase, or to extra overheads, but at any rate the price of bread was increased, and the farmer felt that he was getting the blame, although he was getting no benefit.
Yet in all the post-war years no industry has increased its productivity more and absorbed more new ideas and techniques, although at the same time—as my hon. Friend the Member for Newbury (Sir A. Hurd) pointed out last week—the numbers of farmers and farm workers

have decreased. It was for these reasons, for which the Government must accept some measure of responsibility, that I expected, a fortnight ago, to be moving a narrower Motion this afternoon, calling for immediate action. Thus, I was delighted to find that my right hon. Friend the Minister of Agriculture had quickly persuaded the Cabinet to agree to a policy of import control. That is why my Motion is framed as it is.
No doubt the one Liberal Member sitting opposite at the moment may not like the Motion, since Liberals seem to prefer the importation of overseas food free of duty.

Mr. Jeremy Thorpe: The hon. and gallant Member had better read our policy.

Sir H. Harrison: The hon. Member had better consult his grandmother, Lady Violet, and find out what she thinks. Those who do not like support prices are free to vote against the Motion.
I want to raise a few points concerning the detail of the way in which import controls might work. First, I want to consider a commodity of which we produce all that we require, such as milk. Can we have an assurance that under no circumstances will the import of liquid milk be allowed?
When we think of milk, we think of beef, and here the Government for some time now have given great encouragement to farmers to reduce their dairy herds and to go in for beef. That policy has been quite successful. That is why everyone was upset at what happened at the beginning of this year, because it was clear that if we were producing more at home we must have a restriction on imports. During the first three months of this year, there was a big increase in imports from the Argentine. They were nearly doubled. I am glad that my right hon. Friend has been able to make a temporary and voluntary agreement to the end of the year. But I do not think that this is enough. This is a case in which immediate action is required.
We also see that although the production of home bacon was up by 10 per cent. in 1962 over 1961 imports, also, were higher. There is some concern among pig farmers at the cutting back in the standard number of pigs in the Price


Review this year to 11 million. I must express the hope that when working out import controls for this commodity the Minister will allow the industry to keep the expansion of 12 million reached last year, and of which it shows that it is capable.
We see a continuing increase in the home production of cereals, especially in barley. If standard quantities are to be imposed, I hope that my right hon. Friend will take account of the fact that owing to scientific research in which the Government play a very great part, and the ability of our farmers, more is continually being produced per acre. Will my right hon. Friend therefore consider making his standards on an acreage rather than on a tonnage basis? We have had Questions recently in the House about the relative merits of maize and barley. There is no doubt that in balanced rations there could be a good deal of substitution of one for the other. I know something about this, because far some years I was actively engaged as a corn merchant.
If we are to protect the home producers of barley, there may have to be control over imports of maize, although maize is not produced in this country. Home-produced barley was up by 14 million tons in 1962 over 1959 and imports dropped by 650,000 tons. We see that the maize imports were up nearly 50 per cent. in 1962 over 1961. This was partially due to the late harvest here, and I am glad to notice the big fall in the imports of maize for the first quarter of this year. It is interesting to recall that two-thirds of the maize we import comes from the United States, a highly industrialised country, and not from one of the poorer, underdeveloped countries. Here, perhaps, is a commodity to which my hon. Friend might give attention.
We see a fantastic rise in the price of world sugar. I underline the word "world", particularly in view of my right hon. Friend's replies to Questions asked earlier this afternoon. I believe that this should be a warning to the people of this country. We have been severely rationed in the acreage of sugar beet for many years, and when the sources of supply from overseas become very expensive, surely we must look again at the position. This

must be a long-term plan, as the planting season for this year is over and we cannot get an increase in home production until the winter of 1964. I hope that there will be no rigid impositions, because I believe that this could be an opportunity, if cereals are to be restricted, where we could, and with advantage, well increase our acreage of sugar beet.
I do not wish to lay down exact details, regarding restriction, or go into the question of whether quota or specific or ad valorem duty would be best, or the right method for the control of imports. My own feeling is that each commodity must be dealt with on its merits. What might suit one may not suit another. I would, however, stress that timing is very important and that it may be necessary to have prohibition of entry at certain times of the year. We can, of course, think of grain at harvest time. Some people believe that what may be required is either a commission or an authority under the Ministers, armed with flexible powers which might be used very quickly.
This, of course, could apply both ways. When adverse conditions arose duties could be removed for a period, as was done regarding foreign vegetables in the spring of this year, when we were short of home-produced vegetables owing to the prolonged frost.
For many years I have firmly believed that the consumer likes stable prices. Nothing upsets a housewife more than when prices either rocket up or down—[Laughter.] That is perfectly true—and she has to rearrange her budget. By this new system, wisely administered, we shall get stable prices which will be to the great benefit of the consumer.
We also want to maintain an expanding market for our home production. The importance of this has been referred to in the Report of the National Economic Development Council and last week my right hon. Friend talked of the expanding population. I presume he means that home production will get its full share.
There have been two most interesting articles recently, one as late as last Sunday in the Sunday Times by Mr. William Rees-Mogg. He was not writing as a farmer on behalf of the farming industry. He is described as the political


and economic—I stress the word "economic"—editor of the Sunday Times.
I should like to quote a paragraph to support my case:
It should in any case be remembered that in the last seven years British farming has raised its production faster than British industry. In productivity per man and in cost of many commodities it is strictly competitive with the protected agricultures of the major European producers. In Britain, each farm worker produces enough food a year to feed 30 people—in Russia, each farm worker feeds only five people. In addition, Britain's net farming income has fallen in terms of constant purchasing power in the last 10 years.…It is necessary to consider these matters in some precise detail, for, in fact, British agriculture has made a better proportionate contribution to our balance of payments in the last 10 years than British industry—which is itself highly protected. The expansion of British farming, and its rapid improvement in productivity, has been a national asset.
That is strong language and I think that it supports my case.
In applying controls we must be careful that we do not drive up the price of the foreign foodstuffs coming into this country beyond a reasonable level. We are prepared to pay a fair price, particularly for goods which come from the Commonwealth countries. One of the great reasons advanced for us having had a free market has been that we are a great trading nation and that it has helped our export trade, to which my right hon. Friend has made such a valuable contribution. But I believe that our exports are so strong today that even if we send less goods to countries like Poland and the Argentine our balance of payments position will be much stronger by getting maximum home production.
It is said that only 4 per cent. of our population are engaged in agriculture. This may well be true, but there are many people in allied trades who depend for their living and their home market on the prosperity of agriculture, and I believe that all history shows that a nation without sound agriculture goes down hill. Can we be sure, for example, that we could export as many tractors as we are exporting today if we did not have a flourishing farming countryside?
On 2nd May we debated an Order dealing with the guaranteed price of shell eggs and with egg imports. I spoke very critically then of the policy of allow-

ing imports of eggs at all and I forced the matter to the point of a Division being called. I do not think that that was exactly popular with my former colleagues in the Whip's Office, but at least a gamekeeper who has turned poacher knows the rules, and I had given full notice of what I intended to do.
Why do I feel so passionately that we must have a prosperous agricultural industry? It is because of my own personal experiences. I remember, as a small boy of 5 or 6 years of age, being out with an uncle of mine one day when, walking along a footpath, we met a very old man, or at least he appeared to be very old. He looked like Methuselah. He was bent double and had a long white beard. In those days, the value of money was great. My uncle said, "Well, John Jeyes, what would you do if somebody left you £100?" The old man scratched his head and thought a moment and then said, "Well, sir, I would do my innards well." In the arrogance of youth, I thought, "What a silly old man. I should buy lots of games." It was much later when I was a prisoner of war that I realised the old man's wisdom, because unless men and women, in his words, "do their innards well" they can achieve nothing at all.
Twice in our lifetime we have seen this nation threatened because it could not feed itself. We hope and pray that there may never be another war, but there are other things, such as world famine or a rapid increase in world population, which could cause a shortage of food for us. It is surely a sound insurance policy that we should produce a high proportion of our food in this country. The changing fashion in consumption must be borne in mind. In an affluent society people no longer have bread, oatmeal, herrings and potatoes as their main staple diet. They are moving to eating less carbohydrates and more of the enjoyable protein foods and fruit and vegetables.
It must be realised that in administering import controls for the future, having seen what can be produced here, we must allot the balance for the Commonwealth countries and the rest of the world. I ask the Government to set the target for the home producer a little on the high


side, because it is easy to allow extra supplies to come in from outside if required but it is so fatal to our own supplies and prices if in a good year we give too big a share to the exporting countries.
I should like to direct the attention of the House, Government Departments, the National Farmers' Union, and the National Union of Farmworkers to the whole problem of the distribution of agricultural products. We must move forward into the more streamlined age. It may mean that more marketing boards are required, but, apart from that, the process of marketing is still old-fashioned from the farm to the consumer. Too many people are involved in giving a service.
In some ways the consumer likes this personal service, but it involves high prices. For example, in these days, when more and more of the population have, and ultimately all the population will have, refrigerators in their homes, is a seven-day delivery of milk really necessary? Could there not be some inducement by price for people to have a delivery perhaps only twice a week?
The advent of the supermarket and the help-yourself stores may help to bring down distribution costs. I am sure that this development would yield in agriculture and in many other industries rich dividends to the nation if it were thoroughly examined and explored. This could help the farmer to obtain a higher price for his product and possibly lead to a lower price to the housewife.
I hope that as a result of this new policy there will be a greater feeling on the part of the Government, as they have already shown, of obligation and responsibility to the agricultural industry, and a much finer spirit of partnership between the Government, the farmer and the consumer. We have never previously had a finer entry of young farmers than we have at present. Many of these trained and qualified at their own expense, which is not usual among young men and women in other professions. We must see that they have ample opportunity to play their part, using all the new modern, scientific methods on our farms. They must feel that they, too, are in an expanding industry in modern Britain and making a great contribution to the whole economy

of the country. I commend the Motion to the House.

4.26 p.m.

Mr. Charles Royle: I am sure that the House will join with me in congratulating the hon. and gallant Member for Eye (Sir Harwood Harrison) on his good fortune in the Ballot and on his choice of subject, but when I tell the hon. and gallant Member that there is not a farmer in my constituency, he will not be surprised if I take a view of this subject entirely different from his.
I regard the debate as an extension not only of the announcement which the Minister of Agriculture, Fisheries and Food made last week, but also of the debate two days previously, on consumer protection. Therefore, what I have to say on the Motion will be concerned with aspects of consumer protection as far as they apply to import policy quite as much as to agricultural matters.
The House perhaps will not be surprised if I concentrate on one commodity--meat. It is not a bad idea from time to time in the House if we speak on things we know something about. If we all tried to concentrate our speeches in that way the time occupied by many of our debates would be considerably shortened.
The hon. Member and his friends in agriculture were encouraged by the speech of the Minister of Agriculture and the proposals which, as far as he could go, the right hon. Gentleman outlined last week. But, while they were encouraged, they were apparently not satisfied, and the hon. and gallant Member now continues the pressure purposely to keep his right hon. Friend up to scratch. I do not want to be unfair, but I regard the hon. and gallant Member's attitude as representing a very selfish outlook on the part of the farming lobby. In his speech he made only one reference to the consumer and that reference was to the stability of prices, without any regard to their level, and to how and at what price essential food supplies could be obtained.
The hon. and gallant Gentleman does not appear to be concerned about the 50 million consumers of the country. His attitude throughout seems to be that the agricultural community must


be all right and that it does not matter very much about anybody else.

Sir H. Harrison: I did not want to give that impression. I had to keep my speech short, since the debate itself is to be short. I wanted to underline that if we do not have a sound agricultural policy our 50 million consumers will be at the mercy of foreign producers.

Mr. Royle: I am in some agreement with the hon. and gallant Gentleman there. I am not saying that there should not be a prosperous agricultural community. My concern is with how this is to be brought about. The hon. and gallant Gentleman and his friends seem conveniently to forget that, in the hardest winter we have had for over eighty years, with nearly 1 million people unemployed and millions more on short time, cheap meat from abroad, resulting in cheaper home-produced meat, was a veritable boon.
I suppose that the Minister's announcement last Wednesday is to be the blueprint of a new approach to farm subsidies, imports and prices. In other words, presumably it is to be the beginning of a new era. I think that all of us have smelt it coming. in the light of the Press interviews, the failure of the Common Market negotiations, the G.A.T.T. conference, the E.F.T.A. meeting and Tory agitation.
We have no details about what is to happen, only a bald statement. It will take months to work out the details. I hope that by that time another Government will be in office which will look at the problem from the point of view of the country as a whole instead of from the point of view of one section. Certainly, the consumer interest must be paramount.
Traditionally, we have offered a free market for food, and the result has been an abundance and a variety and a low cost unequalled in the world. Imported meat is vital to the task of feeding Britain. I do not want to weary the House. I have only a few figures. I take the three years 1938, 1957 and 1962. I chose those years as examples for a specific reason. The last full year before the outbreak of war was 1938, while 1957 was the year when we were begin-

ning to get away from shortages, and 1962 is the most recent full year.
The consumption per head of beef in 1938 was 55 lb.; in 1957, it was 54 lb.; and in 1962 it was 51 lb. In 1938, the consumption of mutton and lamb per head was 25 lb.; in 1957, it was 22 lb.; and last year it was 25 lb. So, in meat, we are worse fed than we were in 1938. How were these supplies made up?

Mr. Percy Browne: If the hon. Gentleman is to quote figures for meat, he should also include chicken consumption.

Mr. Royie: I agree that there has been some shifting of public demand to poultry. I must say that I never thought, as a butcher, that I would ever see the day when meat was dearer than chicken.

Mr. Browne: The hon. Gentleman said that we were eating less meat. If he adds chicken meat, he will find that his assumption is wrong.

Mr. Royle: The hon. Gentleman will recall that I did not quote pork consumption, either. I was using the word "meat" in relation to beef, mutton and lamb.
In 1938, the home supply of beef totalled 51 per cent. and the imported totalled 49 per cent.; in 1957, the home production had risen to 64 per cent. as against 36 per cent. imported; last year the figure had improved to 73 per cent. home production compared with 27 per cent. imported. In the case of mutton and lamb, the 1938 home production figure was 38 per cent., in 1957 it was 37 per cent.; and in 1962. 42 per cent.
The question I would put to the Minister and to his right hon. and hon. Friends is this: do these figures show an improvement of home effort commensurate with the thousands of millions of pounds in deficiency payments that have been poured out, particularly for mutton and lamb? It must not be forgotten that the milk scheme—which, as the hon. and gallant Member suggests, has been declining to the advantage of beef production—has in the past—and, to some extent, the present—accounted for the beef increase.
It is not the best beef imaginable when we get it, but it is included in the figures of home production. Those of us with experience of this know that, when a beast has had three or four calves, it


does not produce very good beef. Self-respecting butchers do not often look at that kind of cattle.

Dr. Barnett Stross: I have listened with fascination to my hon. Friend. Is he saying that the amount of meat we eat is an indication of the well-being of the nation as a whole? Did he not note with what scorn the hon. and gallant Member for Eye (Sir H. Harrison) spoke of an impoverished diet of bread, potatoes, oatmeal and herring—a diet which produced the strongest and healthiest peasantry in Europe?

Mr. Royle: I always bow to the superior knowledge of my hon. Friend the Member for Stoke-on-Trent, Central (Dr. Stross) in matters of this kind, but the House will expect me to regard beef, mutton and lamb as the very basis of our health. My hon. Friend can have these other things. They are all his. I still want my rump steak on my plate. He can have his choice.
However, I want to leave that particular point, because there are other aspects to this matter. It would seem, according to the hon. and gallant Member for Eye, that it is only incidental that we cannot sell our goods abroad if we do not buy from abroad. But I should have thought that that was elementary in every economic argument. The best example is the protest which, I understand, has already come from New Zealand about the Minister's proposals.
Let us face the stark fact that our farmers can never provide all the meat required by the public at a price which will keep it on the menu consistent with our standard of living. The scheme under which support payments are made has worked badly in short-term periods of both surpluses and shortages, by failing to discourage additional marketing when the market is overloaded and failing to encourage greater supplies when there are shortages. But the long term is separate in its effects on existing home production.
This expansion of home production has been encouraged, I suggest, without any serious assessment of economic justification from a national standpoint. The total Exchequer cost has risen because each additional unit has been subsidised

at the same rate. The consumer has not benefited from increased quantities or lower prices, because a fairly constant supply has been redivided to the advantage of home producers.
It is impossible to judge the full implications of the new arrangements announced last week until we know some other things about them. First, what will be the level of imports under the commodity agreements? Secondly, what minimum import prices are in mind? Thirdly, what will be the level of standard quantities, and how will they be determined? Finally, what will be the total subsidy the Government are prepared to make?
It seems clear to me that the consumer will pay more on two counts: first, through some of the burden of the higher proportion of high-cost home production; and, secondly, by higher prices for the same quantities of imported meat. In passing, it is interesting to note that during 1962 Argentine chilled meat was always from Id. to 5d. a lb. below the price of home-killed beef, but in May of this year—this very month—the differential has completely vanished.
Parliament has always recognised the importance of a prosperous agricultural community. Here I agree with the hon. and gallant Gentleman. Parliament has not been ungenerous. I am old enough in the service of the House to have been a member of the Standing Committee which discussed the 1947 Act. All of us in those days were very anxious to do all we could, remembering the magnificent service which the agricultural community had rendered the nation during the difficult years of war. We did them pretty well in the 1947 Act, passed by the Labour Government.
The February Reviews every year are worked out between the Minister and the National Farmers' Union, and shortfalls of guaranteed prices have been met by enormous subsidies. On a short market the Exchequer sits pretty on high prices. On a fuller market the Exchequer gets very anxious and, as in 1961, shows signs of hysteria. The meat trade became the whipping boy of the Minister of Agriculture on purpose to cover up his own bad arithmetic. That bad arithmetic has shown itself for a long time in these: matters.
I strongly hold the view that a scheme devised in days of shortage must creak in days of plenty. That is what is happening. Four hundred million pounds in producer support is a haunting thing in days of plenty. So, with the fear of reduced subsidies, come the pressures on the Minister once more from his back benchers for unilateral action against imports. Now we get the suggestions of limiting and regulating imports. The hon. and gallant Gentleman is not satisfied with that. He calls attention, in his Motion, to
the need for greater control of foreign food imports.
Deficiency payments are to go on, to be adapted, to quote the Minister,
to present circumstances by bringing about greater market stability"—
along with—
…a system of control of imports or import prices, combined with the extension at home of the standard quantity concept…"—[OFFICIAL REPORT, 22nd May, 1963; Vol. 678, c. 446]
What does that mean? I make my own interpretation of it. I say that it means we are heading far a policy of dearer food. The Minister said that he was not intending to restrict supplies or to raise market prices. After years in the meat trade, I cannot see any other consequence of lowered supplies unless demand falls away. In line, demand will fall away with increased prices.

Mr. P. Browne: The hon. Gentleman has great knowledge of the meat trade. May I ask him whether he thinks that the marketing of meat is satisfactory in this country? Does he think that the butchers have always been very fair in the prices that they have quoted?

Mr. Royle: The butchers have always been fair, but distribution and marketing need some improvement. Five hundred delegates at the meat trade conference at Easter unanimously endorsed the view that any restriction on imports can only be to the detriment of consumer interests and taxpayers' pockets. They are the ones—let it be said quite clearly—who have to meet the housewife.
In passing, I wonder what the Minister is doing in consultation with the distributive trades on the matters we are discussing. My hon. Friend the Member

for Workington (Mr. Peart) mentioned it in the debate last week. It is all very well for these consultations to take place with the agricultural interests all the time, but other people have to get food to the consumer. I think that they ought to be consulted.
To sum up, the Minister has decided that meat is too cheap. I am sure of that. It is costing too much in subsidies. However, his farmers want their pound of flesh. They say that the answer is to reduce imports. By so doing the Government will shock the overseas suppliers whom we might need again some day. They push the bill on to the consumer. The Tories have lost elections before today on this issue, and they will lose again. Only a planned marketing and distribution policy—the hon. Member for Torrington (Mr. P. Browne) will be glad to hear me say this—will give the population what they deserve in price, quantity and quality.
The ideas of the hon. Member for Torrington may be very different from mine, but he will be surprised to know how far I am prepared to go with him on that question. In the rush which is now going on to manage the market and retain the farming vote, the housewife can well do with some champions of her cause. I want to be counted as one of them.

4.48 p.m.

Mr. R. H. Turton: First, I want to congratulate my hon. and gallant Friend the Member for Eye (Sir H. Harrison) on putting the case so very clearly and effectively when he moved the Motion. I congratulate him on his good fortune in winning the Ballot and choosing this subject.
I thought that the speech of the hon. Member for Salford, West (Mr. C. Royle) was extremely valuable, because I think that it gives us the line that the party opposite will take on this question of an agricultural policy. I cannot believe that the party opposite is as divided on this subject as it is on every other subject.

Mr. C. Royle: This is a private Members' debate. I speak as a private Member.

Mr. Turton: I gather, therefore, that this is a private quarrel. What we want to find out is the view, not only of the


country, not only of the Conservative Party, but of the other two parties on what I consider to be the landmark in agricultural policy announced by my right hon. Friend the Minister of Agriculture, Fisheries and Food last Wednesday. To me, it was common sense, and I hope that although this is a private Members' debate, whoever winds up for the Opposition will make quite clear what the Labour Party's view is on this question of the change in agricultural policy.
It is not possible to work a system of guaranteed prices in a time of over-supply unless there is a measure of control on imports. It is true that in 1947, when there was scarcity, it was possible to work a guaranteed price system, for the market was assured at the same time, but now that we have over-supply, and have had for some time, we must have some measure of control in the interests of the taxpayer, in the interests of the producer, and in the interests of the consumer, about whom the hon. Member for Salford, West, was talking.
The hon. Gentleman rejected my right hon. Friend's arithmetic. I find myself unable to follow the statistics given by the hon. Gentleman, for they have no relation to the actual facts. The hon. Gentleman did not quote his source, so when I quote figures I shall give my source, and we can then judge whether they are right.

Mr. C. Royle: I did give the source.

Mr. Turton: The hon. Gentleman will no doubt be able to put that in the papers afterwards, but he did not give it in his speech. I do not mean that he will be able to put it in HANSARD; he will be able to write to the Daily Herald, explaining why he was more accurate than he appeared to be.
Before the war we produced 24 million cwt. of meat and imported 29 million cwt. This information is derived from the Ministry of Agriculture, Fisheries and Food's annual review figures and the Trade and Navigation Accounts. That means that 53 million cwt. of meat were available before the war. That was not in 1938, when, as the hon. Member for Salford, West knows, there was a certain amount of stocking-up going on. I have given the 1936 figure, and the figure for 1937 was much the same. In 1962, we

imported 28½ million cwt. and produced 39½ million cwt., making a total of 68 million cwt. There has been a change in supply in this country to the extent of 15 million cwt. extra. which has made the position more delicate for the working of the guaranteed system, and also more delicate for the President of the Board of Trade when he is dealing with other countries.
The position with regard to wheat is similar. Before the war we imported 100 million cwt. and produced 33 million cwt., making a total of 133 million cwt. We now import 78 million cwt. and produce 72 million cwt. making a total of 150 million cwt. We are getting a good deal more wheat into this country, and this makes the position very difficult for the wheat farmer in this country.
The position in respect of barley is even more acute. Before the war we imported 18 million cwt. and produced 15 million cwt., making a total of 33 million cwt. Our imports now are down to 7 million cwt. but we produced 115 million cwt., making 122 million cwt. available. I quote those figures merely to show that the whole picture of supply has changed tremendously, especially recently when we have had this revolution in agriculture.
That this does not work with the present guaranteed supply system I can illustrate best by looking at the picture of egg production, where at the moment we are virtually self-sufficient in the supply of eggs. Last year we had a guaranteed price of 3s. 8d. a dozen eggs, yet we imported 2½ million cwt. of eggs at an average price of 2s. 5d. a dozen, together with £300,000 worth of liquid eggs which caused great damage to the health of my constituents and many others by giving them paratyphoid. These eggs were imported at an average price of 2s. ld. per lb. This so upset the guaranteed price system for eggs in this country that the taxpayer had to pay £24½ million in subsidy. This is a ridiculous state of affairs, which I am certain the hon. Member for Salford, West, even in his private capacity, could not possibly defend. We paid £6½ million for eggs which we did not want, and, in addition, we saddled the taxpayer with a burden of £24½ million.

Mr. C. Royle: Who imported the eggs?

Mr. Turton: Many private sources who wanted them to try to get cheap materials for their manufactured products. I shall deal later with the arrangements we make with certain Iron Curtain countries, for which my right hon. Friend the President of the Board of Trade is responsible.
The system of over-supply does not work with the guaranteed price system, and the next thing at which one has to look is what should be the measure of control? The trouble is that not merely is there over-supply in quantity, but that some of these imports are coming in at exceptionally low prices as a result of what I call desperate dumping. Dealing again with meat, in the first three months of this year—and I call in aid the speech of the hon. Member for Salford, West—the position is that in December last year fat cattle were making about £7 10s. 0d. a cwt. By the end of March that figure had dropped to between £5 10s. 0d. and £5 15s. 0d. a cwt., a fall of between 20 and 25 per cent. Why was that?
The Argentine nearly doubled her exports to us in that period compared with the previous year, and Uruguay trebled her exports to us. The average price of Argentine meat that came in in December, 1962, was £9 12s. 0d. a cwt. The average price of Argentine meat that came in the first three months of this years was £7 10s. 0d. a cwt., a drop of over £2 a cwt.
Who benefited? The hon. Member for Salford, West gave his case away when he said that until the early part of the year there was a margin of Id. to 5d. per lb. on British beef over Argentine beef but that it disappeared by May. Of course it did, because by that time the market for meat had been so saturated that there was over-supply and it was not possible to get the preference that better meat really required.
If one looks at the Retail Price Index and compares the level of December with the level of April, one finds that the index for meat fell by 1 per cent. during that period, although the price of fat cattle fell by 25 per cent. Yet it was at the same level as it was in January, 1962, when the price of fat cattle was £8 a cwt. These quick fluctuations in price, this desperate dumping, does not help the consumer, although I quite agree that there may be some whom I would des-

cribe as market operators who get some gain by it.
I hope that I shall convince the hon. Member for Salford, West and those who think like him that what the Government are doing is not merely in the interests of the farmer and the taxpayer, but also in the interests of the consumer. We want stable prices. We do not want wild fluctuations. A country which unloads products by excessive imports here is not doing us any good in our balance of payments.
What is to be the method of control? I am quite certain that we cannot deal with this matter solely from the point of view of quantity; we have also to deal with it from the point of view of price. My right hon. Friend the Minister of Agriculture, Fisheries and Food referred on Wednesday last to the working group on bilateral agreements. I entirely agree that we should be working through a system of bilateral agreements, but I hope that when he or the President of the Board of Trade carry out those agreements they will remember the Crathorne policy of agriculture in which Sir Thomas Dugdale, as he was when he was Minister, announced that he would so conduct his policy as to regard the interests of the home farmer first, the Commonwealth farmer second, and the foreigner third.
We now require an amendment to the Crathorne policy because, after we have looked after the interests of the home farmer and the Commonwealth farmer, we have to look after those of our E.F.T.A. partners in preference to the rest of the world. I hope that whoever answers this debate will make it clear that Her Majesty's Government still hold to that system of priorities.
Turning to what measure of price control we should have, we have to realise that if we are to continue, as I hope we shall, with the guaranteed price system we should be linking our system of import control with that system. We want to avoid imports which come in well below the price guaranteed in this country. I agree that no doubt we shall have to have different systems for different commodities. It makes a great difference whether what we are importing is a raw material for a home industry or a finished product, but generally we ought to have a system of tariffs


which hinges on when the import price is 25 per cent. below the price guaranteed in this country. That is a more effective way of dealing with the problem of excessive imports than the anti-dumping legislation which Lord Eccles introduced a few years ago.
I do not believe that anti-dumping legislation is a satisfactory way of dealing with this matter because it is an insult to a friendly foreign country to call it a dumper. Those countries do not like it. What we can do to a friendly foreign country is to say that we have our system of guaranteed prices which is vital for our home agriculture, but it is equally vital for taxpayers and consumers that it should be operated economically. We should say, "We cannot stand your imports coming in at 30 per cent. or 40 per cent. below the guaranteed price level. Therefore, we shall put on a tariff which hinges at a fairly heavy rate the more that it goes beyond 25 per cent. below our guaranteed price."
I throw out that suggestion for consideration. It is not unlike the sluice gate price system of the European Economic Community. I do not think that the sluice gate system would work so well for us for there is a danger that the Community's system would raise prices unduly high, whereas a system of a hinging tariff would be more in favour of the consumer.
Coming to the problem of the measure of control, I wish to say a few words about standard quantities. My right hon. Friend the Minister has made it quite clear that he intends to introduce standard quantities for meat or cereals in a future Price Review. Reading what was said by the President of the National Farmers' Union only at the beginning of the month, I feel sure that if this system is worked out reasonably it will meet with the approval of the N.F.U. Mr. Woolley said:
I believe that we, as farmers, must take a clear-sighted and balanced view. Obviously, those markets which can pay for produce must not be so flooded that prices fall to wholly uneconomic levels. Quite clearly, on the other hand, we cannot ask other nations to regulate their production and expect to be able to have a complete free-for-all for home production, whether or not we go through the economic ceiling.
As I understand it, that statement by Mr. Woolley was showing that he is quite prepared to accept standard quantities in

a future Price Review if there is a satisfactory measure of control, but I beg the Government so to work their standard quantities as to provide for the economic expansion of home agricultural industry. That is both in the interests of the balance of payments, and the interest of home agriculture.
I put it like that and expect to have an answer when the speakers from the Government and the Opposition Front Benches take part in the debate. I hope that each will give his comments on the different views of policy and prices, including those of the hon. Member for Salford, West. There must be economic expansion. We do not want uneconomic expansion in agriculture. I think that there is certainly in beef very good scope for great economic expansion with the development of recent years, both in barley-fed cattle and the rest.
Who is to carry out this measure of control? I alway fail to understand the departmental system of dealing with these questions of trade and imports. My right hon. Friend the Minister is responsible for the whole of the food of the country, whether it is grown here or imported. Yet he has little or no control over imports of food. That is handed over to my right hon. Friend the President of the Board of Trade, who, curiously enough, looks after trade with Commonwealth countries, while if it is a matter of trade with foreign countries it is handed over to the Foreign Office. That is true. The officers who deal with imports in respect of foreign countries are officers of the Foreign Office.
I believe that there is a strong case for so altering the position that when dealing with food imports the Minister responsible should be the Minister of Agriculture, because if he has a ministerial responsibility for food supplies he should decide the quantity which should be imported, naturally taking it as a Cabinet decision. This seems to me the more important because although, except for the hon. Member for Salford, West and one or two others, broadly speaking there is general agreement on the Government's policy for dealing with this problem, when we consider who should carry out the control there is considerably disagreement.
The official Opposition suggests a system of import boards. I understand


that the hon. and learned Member for Montgomery (Mr. Hooson) wants a commission which would supplant all Government Departments; there would be a certain amount of bureaucracy doing what clearly should be the Government's function. If I am wrong about that, perhaps when the Liberal Party spokes man takes part in the debate he will make a little clearer what the hon. and learned Member intended.
I believe that the question of the control of imports must be in the hands of the Cabinet, the Government and a responsible Minister. In my view, it cannot be handed over to any board or commission although no doubt, just as before the war we had I.D.A.C., an advisory committee could well be appointed, on which I hope the hon. Member for Salford, West and the hon. Member for Workington (Mr. Peart) would work together in happy unison. That seems to me to be the right way, and I do not believe that it can be worked by my right hon. Friend the President of the Board of Trade.
This is not a personal attack on him. I know him to be well intentioned. But, unfortunately, his Department has been responsible for so many things in the past which have gone wrong in agriculture. For example, we have the whole of the Iron Curtain treaties, all the Yugoslav meat, all the Polish eggs—all coming in because, with his zeal for signing agreements to make trade with distant parts of the world, he is bringing in vast quantities of food which are an embarrassment to his neighbour and right hon. Friend the Minister of Agriculture.
I therefore hope, in supporting the Motion, that a measure of control is carried out by the man whom farmers respect and honour, my right hon. Friend the Minister of Agriculture.

5.14 p.m.

Mr. Jeremy Thorpe: The right hon. Member for Thirsk and Malton (Mr. Turton) has, with his usual courtesy, raised certain queries about the Liberal Party's views and I hope later in my speech to answer them, perhaps not to his satisfaction, but at any rate sufficiently to show where we stand.
May I first congratulate the hon. and gallant Member for Eye (Sir H. Harri-

son) on introducing this Motion. It is no criticism of him when I say that perhaps it would have been even more useful if we had been in a position to discuss the precise nature of the policies which the Government intend to implement. The fact that we do not know what they are is not in itself a criticism of the Government, because the decision to change the basis of our agricultural policy was announced only a few days ago.
May I introduce one slight jarring note? I am not certain whether the hon. and gallant Gentleman's reference to a certain lady was in the best taste, but he would do well to recollect that my party relies less on the leadership of grandparents than does his.
I find it very odd that there should be any doubt among intelligent hon. Members who attend agricultural debates assiduously—that is to say, when the Opposition provide a Supply day, as they did this year but did not last year, or when the Government, rarely, as they do, provide time—as to what are the Liberal Party's views on a managed market. I am staggered that there is any doubt at all, because I have had the privilege, with the exception of this year, of speaking in every Price Review debate in the short time that I have been in the House, and I have gone out of my way to say that what I believed was far more important than the particular Price Review under debate was the framework within which agriculture would operate.
One of the reasons why I advocated, during those debates, that Britain should apply to join the Common Market was so that we should be able to benefit from the managed market which had been created within the Common Market. I well remember when I spoke in June, 1961, some weeks before the Prime Minister announced, to the horror of his supporters, that we were to make application to join the Common Market, that I was howled down by Conservative Members and certain Members on this side of the House for advocating that British agriculture would be better served by operating within the managed market concept of the European Common Market.
The Minister now agrees, and the Government have come round to that


view, but it was a very different story at the last election. I well remember being hounded night after night for advocating the managed market within the European concept. I well remember Tory Members coming round my constituency and saying that this would be the ruination of British agriculture. Fortunately, the farmers in my division—by a very small majority, but none the less by a majority—decided to disagree. I therefore find it very difficult to believe that hon. Members who have taken a consistent interest in agriculture are in any doubt at all about where the Liberal Party stands.
We have taken the view that as a matter of principle the farming community should more and more be able to get its return from the market and not from subsidy, and that the greater the percentage of the return which can be produced by the market price as opposed to the support figure the stronger and healthier will be the position of the individual farmer. It was to achieve this that we have seen in Europe the creation of commissions for various products, with power to co-ordinate home production and imports. In this connection, I agree wholeheartedly with the right hon. Member for Thirsk and Malton that Ministerial responsibility for those two factors should lie in the same Ministry. They cannot be divided. I shall comment on the extent to which I believe that the commission should be independent of Ministerial control.

Mr. Denys Bullard (King's Lynn): I am trying to follow the hon. Gentleman's argument about a managed market. Surely it is a fact that under the European system the managed market would have operated only under the influence of a swinging common external tariff? Secondly, surely it would have involved a very considerable increase in the price of food. Will he not meet both those points in the new circumstances?

Mr. Thorpe: May I correct the hon. Member's use of verbs? It is not a question of saying that it "would" be possible. It "is" possible only by the means which he mentions. This system is working. The European countries have a long way to go, but the foundation of a common agricultural policy has been laid. I wholly agree that if we are to have a managed market we must have power by one means or another, whether it be

by a system of quotas, tariffs, the ad valorem tariff or the tariff which becomes operative on a particular date, as with certain aspects of horticulture, to exclude imports. I concede that. I also concede that under the European Common Market there would have been—or there is—a very real possibility that the price of food would rise.
The argument which we put forward, and which I am delighted to say was subsequently adopted by the Government, who came round to this view, was that this might to a very large extent be offset by the more efficient marketing systems to be found in Europe as compared with our own, with the possible exception of milk which, I think, is without its competitors anywhere in Europe, if not the world, and, further, the consequential industrial advantages to be gained.
The hon. Gentleman asks me, very rightly, whether this system is going to increase the price of food, whether a managed market is going to put up the price of food. I think that before one answers that one must ask why a change of policy has been necessary. As I see it, the 1947 and 1957 Acts, which had the support of all parties in the House, and, indeed of the farming industry, attempted to maintain relatively free markets whilst giving a degree of security to the farming community. The 1957 Act accentuated the wish of the Government of the day to increase that security. But since 1955 it is quite clear that those Acts have failed as far as the attainment of those dual objectives are concerned.
Whilst we have seen subsidies increased from £206 million in 1951 to over £350 million in 1961, the price of food, none the less, has gone up by 10 per cent. And not merely that. The incomes of the farming community in the comparable period have risen by only 11 per cent., as all hon. Members who have agricultural interests will know, compared with an increase of 40 to 50 per cent. as far as the rest of the community is concerned. The effect, therefore, of the policies which the Government have been following is, first, that the subsidy bill has gone up secondly, that the price of food has gone up, and, thirdly, that the real incomes of the farmers compared with the rest of the community have gone down—a fantastic triple achievement even for a Conservative Government.
The Government are, therefore, faced with this fantastic economic achievement which not even Dr. Schacht or any other great economist could have planned. We are faced today with finding a new agricultural policy, first because the existing policy has, for the reasons I have mentioned, failed to achieve its objective and, secondly, because the Government, through their own stupidity, left the application to join the European Common Market so late that we now find ourselves excluded from a community of which we could have been the founder members.
I believe that the Minister is on the right lines in the policy which he has announced. Let me say in answer to the right hon. Member for Thirsk and Malton, who is asking me to go into far greater detail concerning the policy which we would recommend than we have yet heard from the Government of the day, that it may well be that there is some death-bed wish at work in the Tory Party and that hon. Members opposite are already becoming Opposition-minded and probing to see what the policy of the future is going to be.
I would have said, first of all, that it is vital in any system that we should have improved marketing, with commissions concerned particularly with cereals and meat, which could have the dual power of co-ordinating home production with imports. I believe that, ultimately, the Minister should be responsible for the decisions taken. What I think that my hon. and learned Friend the Member for Montgomery (Mr. Hooson) sought to suggest—and in this I am in wholehearted agreement—is that these commissions should be not independent of the Government but should be given an overall degree of autonomy such as is intended for the marketing commissions in the European Common Market. I believe that they must be free of the day-to-day political pressures, with, of course, the Minister of Agriculture remaining responsible for what the price fixture will be and for what quotas and what amount of imports will be allowed in any particular year.
Obviously, it is for the Minister, in company with the rest of the Government, to decide what sort of beef pro-

duction we want and what sort of trend there should be in milk production, and so forth. I believe that those general overall decisions must be left to the Minister, but that the day-to-day decisions should be delegated to the commission.

Sir Richard Glyn: I am following with great interest what the hon. Gentleman is saying. He says that the day-to-day decisions are to be left in the hands of the commissions. It seems to me that there are two decisions of great importance, and I want to be clear that it is the hon. Gentleman's view that the commissions should have the duty to make them. First, the immediate control of a sudden flood of imports which might unbalance the market. Would the commissions control that? Secondly, would the commissions have the duy of coordinating the home production with imports? Would they have the power and duty to restrict home production if they thought right?

Mr. Thorpe: As I see it, and in so far as these are day-to-day matters, yes, they would have that duty, but, clearly, the over-all picture of what is to be the beef production of this country over the next two or three years is a matter for the Minister. I would recommend to the Minister that if we had a system of target prices such as is envisaged in Europe and a quota system similar to that in Europe, these would be matters which could be delegated to the commissions and the commissions would, therefore, have the power to carry out the process mentioned by the hon. Member for Dorset, North (Sir Richard Glyn). Obviously, this is an enormously complicated question. It represents a complete Government change in agricultural policy. I hope that we shall hear from the Minister or from the President of the Board of Trade in some greater detail the manner in which this new agricultural policy is going to be operated.
I am afraid that I cannot agree with the hon. Member for Salford, West (Mr. C. Royle) in thinking that the butchers always charge a fair price. Of the £78 million Supplementary Estimate in 1951, very little of it went into the pockets of the farmers. I believe that all this policy of a managed market will be set


at naught unless we have a very vigorous attack on the whole of our marketing system. I should like to start with the millers and the fertiliser manufacturers and, to a certain extent, with the brewers and many other middlemen who find that the farmer is a very weak seller and who have, in my view, quite outrageously exploited his position in the last few years.
This must not be a selfish measure simply to maintain a level of production whatever the cost to the consumer and irrespective of the effects on the rest of the world. As was said in the Price Review debate, we live in a world in which a large percentage of its population are existing at starvation level. I think that this must be linked up with an attempt to get commodity agreements. I think that we may well have to take a look at the export position of many of our Commonwealth partners, who, in any event, would have found some of their exports restricted had we joined the Common Market. We have to realise that the N.F.U. plan has certain merits which should be studied by the Minister. I think that he has a very difficult job of maintaining an agricultural industry which is able to expand and thereby reduce its prices, because it has been part of the Tory philosophy that the industry must reduce its costs but must not expand. As the farming community has pointed out, it is only by expanding that costs can he vigorously cut. This is an economic point which, I think, at last has been accepted. This is perhaps one of the most difficult agricultural problems which has been faced by any Government since the 1947 Act was introduced.
Finally, by way of answer to the hon. Member for Salford, West, I think that the hon. and gallant Member for Eye was very wise in quoting the article of Mr. William Rees-Mogg in the Sunday Times. Those who would seek to regard agriculture as expendable would be very wise to ponder over that article. I have a very high regard for Mr. William Rees-Mogg, although it did not prevent me defeating him for the Presidency of the Oxford Union; but he came up and fought another day.
I believe that we must not get into a situation in which we become a divided nation, a primarily industrial nation which

might believe that agriculture was economically expendable. That would be absolutely disastrous to the agricultural community. This is why—I make no complaint, and I do not make this as a party point—I think it is unfortunate that in our debates when we are discussing coal there is a preponderance of hon. Members on one side of the House and when we are discussing agriculture there is a preponderance of hon. Members on the other side of the House. I think that always leads to the threat that we may well be a divided nation. So I think it is terribly important, not only for the consumer, who, after all, in the long run will benefit by having stability of prices, but for a farming community, which has the feeling that it has security to expand and to lower its costs and make a contribution to the balance of payments.
It is also very important that this system should produce a fair price for the sake of the agricultural community itself. Because were any import system of quotas to be operated unfairly to the disadvantage of the industrial wing of our society, or, indeed, consumers generally, then I think that the consumer might well regard the vitally important minority in agriculture as being economically expendable. That would be a disastrous thing for this country, and I believe that socially as well as economically it would be a very grave blow. We should become a country of deserted rural areas with people crowding into the towns. We should become subtopia—if we are not already a subtopian country, we are getting very near it—and I believe that this would hold out very great dangers indeed for the agricultural community.
I hope, therefore, that we shall hear more from the Government about what they intend in detail for the implementation of this policy. I think that this debate has been valuable as it has assisted the hon. and gallant Member for Eye to understand what the Liberal agricultural policy is, which no doubt he will ponder over carefully, and we are very much in his debt for his having raised this matter this afternoon.

5.35 p.m.

Mr. Paul Bryan: Like previous hon. Members. I should like to congratulate my right hon. and gallant Friend the Member for Eye (Sir H. Harrison), first, on his choice of


subject and, secondly, on the way he introduced it. When the Opposition chose agriculture as the subject for debate on Wednesday last, I thought that they had rather stolen his thunder, but in fact this debate is fitting in very well, for I am sure that there are many hon. Members who value this opportunity of airing their second thoughts on the very important things that the Minister said.
As my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) said, this was clearly a landmark in the British agricultural history. The Minister on that day said that he did not mean to depart from the principles of the 1947 and 1957 Acts. I am sure that he does not intend to do so. But he is certainly putting a fresh wind of change through the way in which those Acts operate, because control of imports is what the farming community has been most insistent about for many months past. If farmers have been uneasy or distressed over the last few months, their distress has been due less to such things as the Price Review than to the cloud of surplus which has overshadowed the hitherto wide open, free British market.
The 1947 Act refers to
…such part of the nation's food…as in the national interest it is desirable to produce…
The Government have never really had to decide exactly what the level of that production was to be. Of course, in Annual Price Reviews the Government have been able to influence to some extent home production. I suppose that market forces have also influenced that production, but in a world where nearly all produce, whether foreign or home, is subsidised, market forces have not been a true reflection of real costs. Now that the Minister is to take power to control imports he has also taken on himself the definite decision as to exactly, or pretty well exactly, what home production is to be.
My right hon. Friend the Member for Thirsk and Malton has made various suggestions in this direction, and obviously one would have to decide product by product whether one could produce it cheaply at home in relation to foreign producers and so on. At the same time, one has to have a broad principle on which to base this key

decision which is the crux of what we are talking about today. Some people have suggested that the proportion of home production to foreign imports should be kept at today's percentage. This would certainly represent a check on our present rate of expansion. Today, as has frequently been said we have increased to 168 per cent. on pre-war figures. In the same time, the population has gone up by 10 per cent. By value, in pre-war days we were producing in this country about one-third of our food; today we are producing about half, and that proportion is continuing to increase.
In the N.E.D.C. Report, I see that for the years 1961 to 1965 it predicts an 18 per cent. net increase and that productivity per man is to go up by 34 per cent. These are better figures than for the previous five years, and it is obvious the rate will accelerate. So as the years go on, on present trends the farmers of this country expect to increase the proportion of home production, and not only to increase it hut, in my view, increase it tremendously. because of all the imports that come in two-thirds are of a kind that can be produced in this country.
This is confirmed in the N.E.D.C. Report. It says:
The information supplied by the industry shows that it expects to supply an increasing proportion of our food supplies at the same time as raising productivity at a faster rate than over the previous five years.
Another easy-sounding solution, which I read in the newspapers, is that one might decide to keep imports at their present level and to allow the home farmer to take advantage of any increase in home consumption. This, again, would represent a slowing down of our present rate of expansion. The N.E.D.C. Report says that spending on food should go up at the rate of about 2 per cent. every year. That in itself would represent a depressing and damping down of our expansion which is certainly increasing at a swifter rate than that. The Report says that technical advances tend to raise the level of output faster than the growth in the demand for food. I bring this forward to indicate that one has to think in terms of increasing production at home if we are not to see a decline in the present graph of the actual proportion of consumption grown in this country.
How is this level of imports to be enforced? I will not expand on this, because my right hon. Friend and neighbour from Thirsk arid Malton dealt with it very professionally, but the idea widely canvassed in the weekend Press was that the method should be to impose a price below which a commodity could not enter the country. That is a fairly elementary way in which to deal with the problem, for although it deals with the problem of deficiency payments, it turns the terms of trade against ourselves. The down-to-earth Russians were astonished when we would not have their barley at £14 a ton, but welcomed it at £20. I would be astonished, too, if we could not think of a better method than this. Levies of some sort would be equally effective and at the same time would do something to pay our home support costs.
I underline what has already been said about differentiating among our suppliers. I am sure that hon. Members and people all over the country will feel very strongly that No. I priority should go to the Commonwealth, No. 2 to our traditional suppliers and no priority at all to those, often from the Communist bloc, who have used our market as a convenient dump.
I am sorry that the hon. Member for Salford, West {Mr. C. Royle) was not as pleased as I was with the Minister when he said that the object of controls was not to raise but to stabilise prices, because I believe that stabilisation is what will take place. It is not just the controls but their very existence which has the effect. I am sure that when farmers in my constituency know that barley is coming into Hull, that automatically depresses the market, never mind what the quantities are. The fact that they will know that from now on there will be some sort of control will produce a new stability. The whole story of our recent meat troubles has pointed in the same direction.
The hon. Member for Salford, West said that the Minister's speech had been badly received in New Zealand and by our other suppliers from abroad. As against that, I quote what was said on 23rd May by Senator Henty, the Australian Acting Trade Minister, who welcomed the Minister's speech and said:
The change in British policy could offer Australia an opportunity to secure agreements which would result in a stable market with remunerative prices for important export commodities.
1366
The Australians see a lot of sense in this and an advantage to themselves in a stable market.
The case of the imports of Argentine meat this year has been quoted. As the Farmers Weekly said a week or two ago, in the first three months of this year the Argentine exported to this country twice as much meat as in the corresponding period of 1962 and made about half the profit. So from every point of view, ours and theirs, the whole story has been unhappy.
My last question to the Minister is this. If import controls are to be introduced, as promised, when will the changes take place? Will they be made in time to affect the marketing of this year's harvest? If not, I urge the Minister to have some ad hoc measures up his sleeve very early in the day to prevent a flood of imported cereals. Nothing now would do more harm to farming confidence or create more disillusionment than a depressed and glutted cereal market in the first harvest after the Minister's announcement.
Nowadays, every country supports its home agriculture by one device or another. All have found it a tricky business. None has produced a completely satisfactory answer. In the last few weeks, there have been international assemblies in Brussels, Lisbon, Geneva and Dublin, and our Commonwealth Ministers have been meeting here in London. At each of these gatherings agriculture has been the major problem.
Efforts to provide a sound basis for agriculture in this country have had their ups and downs since the war, but by now the system, adjusted as we have gone along to meet varying circumstances, has become the envy of the world. It has produced an expansion and stability of a sort never before known in this country. I believe that these new steps will bring confidence and with it prosperity to those who owe their livelihood to British agriculture.

5.46 p.m.

Mr. George Darling: The right hon. Member for Thirsk and Malton (Mr. Turton) asked me to explain our attitude to the Government's new policy on food imports. We do not know what that policy is. We


have had some vague assertions of unexplained intentions. The intentions may be good, but we cannot comment on them until we learn more about them. What we can do, as the right hon. Gentleman himself did, is to tell the Minister what we think he ought to do, and I propose to make my contribution and perhaps the right hon. Gentleman will be able to judge in the end whether we agree or disagree with him.
He suffered from the limitations from which all of us in the debate suffer—that we have to be far too brief, and are unable to go into the details with which we would like to deal. I congratulate the hon. and gallant Member for Eye (Sir H. Harrison) on having started what has turned out to be a very interesting, useful and timely debate. I agree with him that British farmers have done extraordinarily well ever since the war in improving, expanding and developing home food production.
However, the hon. and gallant Member weakened his case for giving them more protection by making hardly any reference to our internal marketing arrangements. While it is true that farmers deserve all the congratulations we can give them for improving production. the improvements which should have taken place in marketing have not taken place. He did not give us any nonsense about the alleged virtues of free markets and free competition. He is all for controls. I must remind him that we had a debate on the consumers' side of things last week and all his hon. Friends who spoke in that debate were all for competition, very few controls, and free markets all over the place.
The Liberal Party went even further. The right hon. Member for Orkney and Shetland (Mr. Grimond) opened his contribution in that debate with a declaration which would go down well with the Liberal Party Assembly. He said:
The consumer's best friend is a free market. Competition not only allows him or her to exercise choice; competition also protects the consumer from exploitation."—[OFFICIAL REPORT, 20th May, 1963; Vol. 678, c. 60.]
The hon. Member for Devon, North (Mr. Thorpe) has thrown his leader's free market and free competition right out of the window. I agree with the hon. Member and disagree with his leader.

Mr. Thorpe: I may not be in a position to offer the hon. Member the Whip, but the matter will be considered.

Mr. Darling: The hon. and gallant Gentleman covered a lot of ground as he built up his case for import controls. I shall resist the temptation to cover the same ground and I shall limit myself to a few general observations which, I hope, will meet the point raised by the right hon. Member for Thirsk and Malton, and I shall then make some comments by way of example on the meat situation, which has been one of the most troublesome problems in the minds of hon. Members opposite.
My first general observation is that the demand for stricter control of imports proves what my hon. Friends and I have been saying for the past ten years; that one cannot operate a deficiency payments system satisfactorily in a disorganised market. The right hon. Member for Thirsk and Malton said much the same thing today, but he did not say it in 1954 and 1957. However, we all learn from experience. I need not elaborate this theme because my hon. Friends and I have done so on many occasions in previous debates. We have explained the proposition repeatedly and there seems now to be general agreement about it. The Minister of Agriculture endorsed our views only a week ago.
But we cannot accept the solution of the hon. and gallant Member for Eye, of stricter import controls if they, whatever form they take, will be used to protect disorganised, inefficient and costly marketing arrangements. Moreover, when we talk about import controls we must remember that we frequently make complaints about other countries putting on import controls of their own against our exports. We must remember that, as the Minister of Agriculture, Fisheries and Food said only a week ago:
We want arrangements which will ensure fair access to our market at reasonable prices, both to the overseas supplier and to our home producer. We ½wish them to be½flexible½
He also said:
In reaching agreement with them"—
the overseas suppliers—
on measures which they should take to contribute to the stabilising of our market, we must be prepared to make our own contribution to that same end ".—[OFFICIAL REPORT, 22nd May, 1963; Vol. 678, c. 449–50.]


This balancing of trade interests is one of the most difficult problems to be faced as we try to work out a new system of import controls. We must all the time remember that while 4 per cent. of our population is engaged in agriculture, 100 per cent. of our people are food consumers. For these reasons—and while I express a personal view, I believe that it is shared by my party—we must go back to the principles of the 1947 Act, which provided for a planned expansion of agriculture, encouraging farmers to produce those things which were in short supply and discouraging them on occasions from producing surpluses, through the Price Review and the development of organised marketing.
Whatever is said about the need to control imports, we believe that those controls must be part of the general marketing organisation in order to obtain stable deliveries and prices, but not to deprive our people of the increasing productivity, better supplies and price advantages from overseas, especially Commonwealth, countries. Hon. Members opposite have complained about the deliveries of cheaper meat, particularly from the Argentine, at the beginning of this year. They have said that this cheap meat was harmful to Britain's interests. I repeat what my hon. Friend the Member for Salford, West (Mr. C. Royle) said in his well-informed speech, that meat prices did fall in the shops, especially in the North. They were forced down at a time when we had nearly 1 million unemployed and millions of workers on short time.

Mr. Turton: The Retail Price Index figures must be conclusive.

Mr. Darling: They are average figures for the whole country, and if the right hon. Gentleman cares to look at the returns published by the meat traders' organisations he will find that in most of the industrial areas the price of meat went down. The reductions were in many cases substantial. I am not saying that this applies to the more expensive cuts of meat, but particularly to the cheaper cuts.

Mr. A. E. Orarn: My hon. Friend has referred to the Retail Price Index as being the average for the country. Is it not also providing average

figures, in effect, of the prices of the different cuts of meat?

Mr. Darling: That is correct, and while I could give the right hon. Member for Thirsk and Malton the figures, I do not wish to delay the House. However, the people who were able to take advantage of those reductions were very pleased to do so, particularly in the industrial areas where there was a great deal of unemployment and short-time working.
I represent a part of the City of Sheffield. I urge hon. Members opposite to remember that the engineers and steelworkers in my constituency have suffered bigger cuts in their incomes proportionately than any people in the farming community. Many of my constituents have been on short-time for nearly two years and, in some cases, their incomes have been halved compared with two or three years ago. Not one of them has complained to me about those reductions in meat prices.
We believe in an organised marketing of the nation's food. We have said this on many occasions. It is implicit in the 1947 Act and we stand by it. We believe in getting food into the homes of our people as efficiently and cheaply as we can. We shall oppose any attempt to solve our agricultural problems at the expense of the housewives and consumers, not only because that would be unfair to the mass of the public, and would create other difficulties in regard to wages and our balance of payments, but also because we believe it is unnecessary. We believe in the spirit of the 1947 Act, and that we can give both the farmers and the public a fair deal, if we go back to the principles of that Act and get rid of the alterations, which have upset some of the basic ideas of organised marketing, that came in with the 1957 Act.
To explain, in answering the right hon. Member for Thirsk and Mallon, where we stand, I would remind the House that when the 1947 Act was introduced it was designed not solely to benefit the farming industry. Any hon. Member who doubts this should read Mr. Tom Williams' Second Reading speech on that occasion. Three principles were implicit in that Act, and we should remember them. The first is that the Government —and the whole community was behind


this—were planning for a prosperous Britain with full employment and a fair sharing of the prosperity. We realised that that prosperity would be based on industrial activities and, therefore, we faced the danger that unless we gave special aid to agriculture we would have pockets of industrial prosperity in a derelict countryside.
The second point was that we agreed —and we still agree—that that aid to agriculture should not be given through high food prices. The third was that we wanted then—as we still want—to have an expanding agriculture and for it to be self-sufficient in those things in which it is able to be so; but not to seek self-sufficiency at too high a price or in such a way as to damage our international trade or injure our Commonwealth relations.

Mr. R. J. Maxwell-Hyslop: The hon. Member is saying that the aim should be for agriculture to be self-sufficient in those things in which it can be self-sufficient. Does he believe that we can be self-sufficient in beef as well as in milk products? If so, does he still agree with what he said earlier?

Mr. Darling: I do not think that we can be self-sufficient in beef. I would be prepared, on another occasion, to discuss this matter with the hon. Member. It is an extremely technical subject. We can be self-sufficient, as we are, in milk, eggs and one or two other commodities, but certainly not in lamb or pork.

Sir James Duncan: Pork?

Mr. Darling: Yes, pigment. I think that we shall go on importing bacon and ham.

Sir J. Duncan: Did the hon. Member say pork?

Mr. Darling: I meant pigmeat generally. We still stand by the principles that were implicit in the 1947 Act. We do not intend to allow agriculture to be the poor relation of our industrial society.
There has been public criticism of the high level of support subsidies, and here I return to the meat situation. The great increase in subsidies is, in the main, due to the disorganisation of the cereals and meat markets, for which this Government are responsible. Do hon. Members

opposite remember how they cheered when the Government announced the end of bulk buying and of all our contractual arrangements? They have now come round full circle, and again want the international commodity agreements and long-term contracts at stable prices in which we on this side have always believed.
We shall be very interested when the right hon. Gentleman the Minister of Agriculture brings forward his proposals for dealing with the meat situation, but I want to use this as an example of the kind of problem we are up against, and our approach to it. I must, however, tell him, as we have said before, that import controls on meat will not work satisfactorily until we have reorganised and improved our meat marketing.
This is not hindsight. If hon. Members will look at the long drawn-out proceedings on the Slaughterhouses Bill five years ago, they will find that twice a week for three months my hon. Friends and I tried to explain to the Government how impossible it is to organise the meat trade satisfactorily through three or four thousand fiddling little slaughterhouses. I do not intend to go over all those arguments again, but I will mention just one reason among many for concentrating the whole meat trade through about a score —or perhaps thirty—well-sited, large-scale factory abattoirs.
I refer to the problem of meat storage. The increased imports of Argentine meat about which hon. Members opposite have been complaining were not the real cause of the trouble. We are bound to have ups and downs in our cattle and meat supplies—it is that kind of trade. The trouble is that we are completely inadequately supplied with cold storage facilities for these temporary and seasonal surpluses. We shall never even out these ups and downs until, throughout the country, we have adequate cold stores for both home-killed and imported meat. Our home-produced meat, when it ought to be held back from the market because there is too much in the process of getting it into the meat shops, ought to go into cold store as soon as it is killed, and at the point at which it is killed; the cold stores must be part of the abattoirs, and serve as regional centres of meat distribution.
I do not know what kind of report the Minister will get from the Verdon Smith Committee, but unless it is based on the idea of factory abattoirs and getting rid of all these small slaughterhouses--unless they are fitted in as sort of outposts to the factory abattoirs—we shall never make progress. This is not a new idea. The first Report suggesting that our meat trade should be organised on a network of factory abattoirs was put out by the Economic Advisory Council in 1930—we have been waiting 33 years for something to be done. I do not think that we can organise our meat trade efficiently in any other way. Fiddling about with import controls will not do much good if the home trade remains disorganised.
I must again mention the problems we shall face in exercising import controls, in which we believe, unless they are associated with proper marketing arrangements inside this country. We shall be in difficulties unless, in approaching the subject of meat controls, we aim at getting the whole national interest properly balanced. I must repeat what I have said a little earlier about Commonwealth trade, and will take New Zealand as an example. New Zealand is a European country which, quite by accident, happens to be about 6,000 miles away. It has a European standard of living, European methods of trade, a European population—now that the Maoris have been assimilated—and lives by supplying Britain with meat, dairy produce, wool and fruit.
New Zealand's economy is geared to our market, as we all know—we take her food, she takes our manufactures—but this trade is now out of balance. We sell more to New Zealand than we buy from her, and that situation cannot continue. One of the reasons why my steel workers and engineers are on short time is that they are not supplying to New Zealand the manufactured goods that contain steel that would be supplied if we had this trade better organised.
If we take less New Zealand produce, or force down the price of that produce, as we have been doing, we might encourage our own farmers to produce more sheep—perhaps on high-cost marginal land—but, whether or not that would do the country any good, we should

certainly damage our trade in industrial products with New Zealand, which is a problem that the President of the Board of Trade has to face. We have to take a balanced view of all these national interests, and make our international trading agreements to promote the widest measure of trade consistent with our obligations to our farmers and to our own industries.
In doing that, do not let any one of us forget the tremendous debt we owe to New Zealand, Australia, and other Commonwealth countries. New Zealand continued her food rationing system for five years after the war in order to feed us. I agree with the right hon. Member for Thirsk and Malton that we have a debt, too, to our Scandinavian friends—and other friends in E.F.T.A.—that we have to honour. We on this side will not be party to any schemes that would weaken those Commonwealth ties or prevent us from honouring our debts to our friends. The House will remember that Hugh Gaitskell made that fact clear in the Common Market debates, when the party opposite was prepared to sell the Commonwealth down the river in order to get into the E.E.C.
We stand by our 1947 pledges to maintain a good level of prosperity for British agriculture. We still believe that we can do that by organised marketing and long-term arrangements for food imports, especially from the Commonwealth. I hope that that answers the questions put to me by the right hon. Gentleman. That is our policy, and we shall stick to it.

6.8 p.m.

Mr. W. M. F. Vane: My hon. and gallant Friend the Member for Eye (Sir H. Harrison) said that he had been overtaken by events—my right hon. Friend's statement last week—so it is, perhaps, natural that this debate should take the line of asking to see the colour of my right hon. Friend's money.
What my right hon. Friend announced to the House last week wore the broad principles, but it was a momentous statement, and I suggest that its importance far outweighs any detail that we may be given later. The important thing for the farming industry, for the country and for every country that sends us supplies was in that announcement. It completely outweighs any small differences we may have


about the methods when they are revealed to us.
It is also natural that a good deal of emphasis should have been put on consumer interests, but I thought that my right hon. Friend's whole speech paid regard to those interests, and our recent policy shows throughout interest in the consumer position. We have nothing to be ashamed of there. Not only is this an important step forward in our agricultural policy, but it is a great personal achievement on the part of my right hon. Friend. It is something which will be remembered for a long time and welcomed in circles far wider than the farming communities most closely involved.
There was revealed in my right. hon. Friend's speech something which has become clearer and clearer to me over the last few years, as it must have done to all hon. and right hon. Members, that the solution to our agricultural problems and the similar problems in other highly developed countries is quite beyond the efforts of any one country. It can be achieved only by international agreement. This will take time, and, of course, it takes more than one to make an agreement. With regard to the control over imports, my right hon. Friend said that the essence is that there will be agreement between ourselves and the other countries concerned.
It is worth noting, when we are considering food imports, that only a very small fraction of the world's food production ever crosses frontiers, but this small fraction can, nevertheless, have a very big influence on the markets of the importing countries. Our market here is the most important in the world to those countries which have foodstuffs to export. It is interesting to note that the United States of America is now one of the principal exporters to us. No longer is the pattern of trade one of industrial nations exchanging manufactured goods for foodstuffs produced by the less developed nations. Frequently, there is an exchange of foodstuffs between highly industrialised nations, a pattern very different from the one which we were brought up to believe was orthodox.
In this connection, I feel not only honoured but immensely interested to

be going to Washington next week as a member of the United Kingdom delegation to the World Food Congress. The problem of dealing with surplus production, although, of course, it is by no means the key to our efforts to grapple more successfully with the problem of hunger in the world, is, nevertheless, a subject which will constantly crop up in our discussion. It poses a question which we must answer before we can successfully go forward with some of the more fundamental tasks.
When we are discussing the commodities, there is always the danger of forgetting that the long-term key to farming prosperity is not this commodity agreement or that. It is to be found in the way we handle our land and our skill in the business of husbandry. No man can farm well just as a result of price agreements. The land of our country today has never been better farmed. I say this not just because of the nice green colour put on the grass at this time of year as a result of the liberal application of nitrogen. It goes far deeper than that. How we handle our land, not what happens to sugar in Mincing Lane, or what happens in disused Lancashire cotton mills which are said to be full of chickens, is what really matters to us.
We need still more investment in our land if we are to remain competitive. We cannot remain competitive just as a result of limited import controls, as I am sure my right hon. Friend will agree. Yet farming profits soon disappear if there is unwise investment in buildings and, even more easily, if there is over-investment in machinery.
The hon. Member for Sheffield, Hillsborough (Mr. Darling) spoke of the 1947 Act. That Act has great merit. but 1947 is not a holy year, as hon. Members opposite sometimes would have us believe. The Act has, as I say, great merit, and it has proved a good deal more elastic over the years than its authors claimed at the time. It was not a great marketing Act; that came later. The 1957 Act, too, has great merit, and it has buttressed the 1947 Act. Without the 1957 Act, the 1947 Act would not have given to agriculture the stability it has enjoyed over the past few years.
Turning again to the subject of commodity agreements, cereals and meat are clearly the most important and should be tackled first, but, whereas the stability of the cereal market is very important to many farming countries, notably the E.E.C. countries and those with large arable acreages, it is not so important as a key to prosperity in this country nor in other countries on the Atlantic seaboard where grassland is more important, and where upland farming and livestock plays a very much greater part than it does, say, in the centre of Europe or in Canada.
In the uplands, it is not only the four-legged animal which matters. We must think of the rural economy also as comprising rural industries—often making use of the raw material of the locality and offering alternative employment to people. Here, I make just one reference to the "nigger in the woodpile", who was mentioned earlier in the debate in connection with food. If the woodpile were the products of our home-grown timber industry, then my right hon. Friend would remain the "nigger", particularly having regard to what, I believe, has recently been going on at Geneva.
I ask my right hon. Friend to consider the products of our woodlands in the same way as the products of our farmland are considered. This is almost the only country of Europe which does not regard forestry and farming on the same basis, and in the hill lands, particularly, forestry should play a very much bigger part.
It has taken several years for the policy announced last week to be worked out. Such changes of policy are not thought up overnight in any country, least of all an industrial country with trading interests such as ours. Probably, no one knows better than I do how much my right hon. Friend has put into this work, thinking ahead, never letting himself be submerged by the smaller and day-to-day issues which beset every Minister all the time. We passed a great landmark last week, a landmark on a fair road which we ought now to be able to tread confidently not only in the interests of agriculture and the consumer but in the interests of our industrial country as a whole.

6.17 p.m.

Mr. A. E. Oram: The hon. Member for Westmorland (Mr. Vane) said that the speech of the Minister of Agriculture, Fisheries and Food last Wednesday was the result of long years of careful preparation. If that be so, we ought to have been treated on that occasion to a little more detail and specific information than was, in fact, forthcoming.

Mr. Vane: I did not mean that my right hon. Friend had spent a great many years over the speech, very good speech though it was. What I meant was that major policy changes in a country like ours are not thought up overnight—not by wise Governments anyway.

Mr. Oram: I agree, but my point still remains that a little more detail might have been forthcoming, after such careful preparation. I was disappointed, naturally, when you said, at the outset of the debate, Mr. Speaker, that it had not been possible to select the Amendment which I and my hon. Friend the Member for Salford, West (Mr. C. Royle) had put it on the Order Paper. We felt it desirable to set that expression of opinion down because there was a danger of the debate being somewhat unbalanced if conducted within the terms of the Motion as it stood. I was glad to hear many lion. Members make the point, but the Motion itself did not indicate any concern for the consumer or any appreciation of the relation between food imports and our export trade. These two matters are taken up in the Amendment.
In the matter that we are considering today, it is necessary to find the right balance between a number of conflicting interests—the interests of rural England and of industrial England; the interests of the farming population and of the consumer; and the interests of exporters as well as importers. I felt that the speech of my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) was admirable in preserving just the right balance that we need in this matter. My hon. Friend the Member for Salford, West felt that the consumers' interests should be paramount. I hope that he did not mean that they should be paramount irrespective of these other considerations. I am sure that he did not.
In this sort of debate, I try to express the consumer's interest. On the other


hand, I understand the farmer's position and the concern of hon. and right hon. Members who represent agricultural constituencies that an adequate standard of life should be maintained for our farming population. I certainly understand the anxiety of the Government, the Treasury and the taxpayer about the rapidly rising bill for deficiency payments. Obviously, some action had to be taken in connection with that matter. The point that I stress is that, if action is taken to restrict the import of food, that must be done only with all due consideration to the interests of the housewife, the consumer of food.
I think it fair to say that the implication in the speeches of hon. Members opposite in talking about the import of food is that there has been a sudden and dramatic increase in the import of food and that this represents a tremendous danger to our farming community. I think that there are figures to prove that this is not the threat that hon. Members opposite try to make out.
The hon. and gallant Member for Eye (Sir H. Harrison) quoted figures in connection with maize and founded his case on that commodity. I suspect that he rather carefully selected that commodity because the imports of maize have increased dramatically and, within certain limits, substantially support his case.

Sir H. Harrison: I said that the imports of maize had gone down very considerably in the first quarter of this year. What I tried to bring out was that it might be necessary to restrict the import of something which we do not grow here in order to help a similar product in this country.

Mr. Oram: The hon. and gallant Gentleman was very fair in his presentation of the figures on maize, but I have referred to his selectivity because, like all of us, I need to be a little selective in some of the figures which I propose to present.
I have chosen three commodities which seem to me particularly topical in the present situation—wheat, meat and raw sugar. I have compared 1956 with 1962 in the imports of these commodities. It is interesting to note that in 1956 we imported 4·8 million tons of wheat. In 1962, imports had gone down to 3·9 million tons. In 1956, we imported

805,000 tons of meat. Last year, we imported 786,000 tons, a distinct decrease. In 1956, we imported 2·3 million tons of raw sugar, and last year only just over 2 million tons. There is, therefore, a downward trend in the import of each of these important commodities, which does not bear out the suggestion that the agricultural community is threatened with a very considerable influx of food.

Mr. Bullard: Is not the hon. Gentleman overlooking the effect on the market of sudden increases in importations? He has quoted the figures for meat. The hon. Gentleman will admit that in the first three months of this year the importation of Argentine beef was twice what it was last year. In talking about dramatic decreases, the hon. Gentleman should make some mention of that.

Mr. Oram: I agree that there are temporary increases and that these are important and that measures of control are necessary in respect of them, but, in weighing up general long-term policies, as we are doing today, we should also look at the long-term trends. That was what I was trying to bring before the House.
I was most interested in the way that the hon. Member for Howden (Mr. Bryan) brought out the extent to which home agriculture has increased its production and yields. Again, there are some very convincing figures. Between 1956 and 1962, the increase in wheat in absolute terms was 28 per cent. and the yield went up from 24·8 cwt. per acre to 32·2 cwt. per acre last year. Similar figures can be produced for sugar beet and beef. This shows that there is an actual situation and prospect, as the hon. Member for Howden brought out very clearly, of a considerable abundance in home production.
I always thought that we should welcome abundance, particularly from the point of view of the consumer. If there is more of something, it should be cheaper. Therefore, in this atmosphere of more and more coming out of the fields of Britain, one considers what effect this wonderful new productivity has had on the fortunes of the housewife who buys the bread made from the wheat, who buys the cut of meat in the butcher's shop and who buys the pound of sugar from the grocer's shop.
Unfortunately, the trend is in the opposite direction to what it should be. Instead of abundance producing cheapness, consumer prices have been going up over this period. Again, taking 1956 as a starting point, the whole of food items have gone up 18 per cent. in a period of increasing abundance. The price of bread, flour, cereals, and so on, has gone up 30 per cent. in a period when it can be demonstrated that wheat is being produced in enormous quantities. The price of meat and bacon has gone up 8 per cent. The price for sugar and preserves has gone up 33 per cent. We have had a Conservative Government in office all this time. This is the effect on the bill which the housewife has to meet in terms of consumer prices.
This might be excusable if it could be demonstrated that our imports were costing us more and that the terms of trade were moving against this country. But, as hon. Members know, the terms of trade have been moving dramatically in our favour as a consuming country during this period. The index in terms of trade in 1956 was 99. Last year, it had moved in our favour to 85. There has been an enormous increase in productivity at home. Prices to this country are favourable in the places abroad from which we buy our food. As the hon. Member for Devon, North (Mr. Thorpe) said, it is an economic miracle that the Government have been able to combine increased productivity at home, sources of cheaper food abroad and increasing prices for the domestic consumer.
We shall look with anxiety at the way in which these new policies are implemented, because restrictions on food imports, though they may be necessary in certain restricted instances, are all too likely to lead to increased retail prices rather than the reverse. We shall want to see the way in which these policies are applied in practice and we shall be vigilant on behalf of the housewife in these matters.

6.30 p.m.

The President of the Board of Trade (Mr. F. J. Erroll): I am glad that my hon. and gallant Friend the Member for Eye (Sir H. Harrison) has used his success in the Ballot to bring this Motion before the House and I am pleased to have th s opportunity of joining in a

private Members' debate on an important aspect of the economic life of the country.
A week ago, as a number of hon. Members have mentioned, the House of Commons had a useful discussion, on the basis of a statement by my right hon. Friend the Minister of Agriculture, Fisheries and Food, on the Government's future agricultural policy. On that occasion, the Committee of Supply was concerned primarily with the problem of our own agriculture industry. That has been touched on during today's debate, but the Motion gives an opportunity of considering in more detail certain aspects of the policy then announced and, in particular, the problem of imports and the need to safeguard the interests of consumers.
As President of the Board of Trade, I am, naturally, very much concerned about the proper balance between the consumption of home-produced food and of imported food. Both in the House of Commons and outside, one comes across two extreme and opposite views of the relationship between food imports and home production. I should like to mention both points of view and give my answers to them.
On the one hand, it is sometimes suggested that the Government's objective should be to make the country as nearly as possible self-sufficient in food production. In these days, there is no economic, strategic or other argument for such a course to be pursued. Britain's exports as a whole amount o no less than 10 per cent. of world exports and our standard of living depends upon the continuation and development of our international trade.
Although Britain is always classified as a manufacturing country and our exports are predominantly of manufactures, we also import large quantities of manufactured products, both consumer goods and engineering equipment, in addition to our agricultural and food imports. By way of example, we both import and export a very large quantity of machine tools each year.
The only way for us to maintain a healthy balance of payments in the long term is to concentrate on producing in Britain those lines which we can produce most competitively and to import what we


cannot. For these reasons, absolute self-sufficiency in food cannot be the objective of Government policy any more than self-sufficiency in manufactured goods.
The other extreme argument is what I would call the cheap food argument of importing cheaply regardless of the consequences. It is certainly not the Government's intention that our market should be flooded by surplus overseas produce off-loaded at prices which not only cause large and sudden increases in the cost of Exchequer support but which also undermine the long-term prospects of British agriculture. So it is between these two extremes that we have the policy of the Government of maintaining the principles of the 1947 and 1957 Agriculture Acts, which involve, to use the term given in this year's Farm Price Review White Paper,
maintaining a proper balance between homegrown and imported food.
This is not a policy either of self-sufficiency at any price or of cheap food regardless of the consequences.
It is all very well to state the principle —and it seems a reasonable and sound one—but, as always in such cases, the difficulty is to define the proper balance. It is made no easier by the inevitable variations in agricultural output, both here and overseas, as between one year and another. I should like to make it quite clear that the Government adhere to the system of support through guaranteed prices and deficiency payments. There is no question of dismantling this system. We propose to modify our system to make it better suited to the circumstances of today.
I am sorry that the hon. Member for Devon, North (Mr. Thorpe) is not in his place, because I should like to refer to his extreme remarks, in which he said that our system had failed. I entirely disagree and I will say why. What the hon. Member said is on the record and I should like the Government's answer also to be on the record and to make plain why we disagree with what the hon. Member said.
As to the price of food, there has been a rise over the years, as was mentioned by the hon. Member for East Ham, South (Mr. Oram), who made play with the points made by the hon. Member for Devon, North. This increase in price,

however, is inevitable with increases in distribution costs, which the hon. Member ignored, and the demand by the public for a greater degree of processing, packaging and the like which, in turn, is carried out by people who themselves expect to work for higher wages and to live at a higher standard of living. The interesting fact is that the wholesale price of meat this year is low, and so is the wholesale price of cereals. There is no room for doubt that the price of food is much lower under our system than it is, or would be, under the managed market system.
The hon. Member for Devon, North spoke about the level of farm incomes in relation to the rest of the economy. It is inevitable that as the standard of living rises, the proportion that people spend on food as opposed to other goods tends to fall. I wonder, however, whether the hon. Member realised how agricultural income in relation to the remainder stands in this country as compared with other countries. In a very good survey undertaken by F.A.O. in 1959, Britain came out third in the "league table" of the whole developed world with a ratio of 80-100. The other two countries that were higher than us were New Zealand and Australia, both of which are essentially agrarian nations. This, surely, is a great achievement and a credit to our support system.
The question of the proper balance at any given time must bear relationship to the balance in previous years. Indeed, we should look at the situation before the war to see how great has been the achievement and development of agriculture since the war. The proportion of temperate agricultural supplies, including sugar, coming on to our market from home production has gone up from one-half before the war to two-thirds now. In 1962, we produced about 70 per cent. of our carcase meat as against only 50 per cent. before the war, and, similarly, about 45 per cent. of our wheat, flour and cheese as against less than 25 per cent. pre-war.
We now produce nearly all our barley, pork, eggs and potatoes at home, and although the proportion is lower, we have also been producing more of our sugar. These percentage figures, which were put in absolute terms by my right hon. Friend the Member for Thirsk and


Malton (Mr. Turton) in his interesting speech, highlight the long-term changes which have taken place in British agriculture.
It may be said that these changes, to a large extent, owe their origin to the war years, but this is misleading in two ways. Our consumption was at a low level in the war years, and since then, while our consumption has risen, British production has not only kept pace and maintained its share but has actually increased its share of this large amount. This is a measure of what has been achieved as a result of the Government's policy of support for agriculture. On the other side of the picture, it is also, of course, a measure of the reduction in the share of our market by our Commonwealth and other overseas suppliers.
The immediate problem is the sudden increases in Exchequer costs which arise when the bottom falls out of the market and the subsidy payments are automatically increased to make good the deficiency between the market price and the guaranteed price. This is very largely due to the fluctuations in imports. Several hon. Gentlemen have referred to the sudden fluctuations of imports coming in very often at low prices. Of course, we must also remember that the flow of produce of our own farms has played a part in the increases in Exchequer costs, These sudden imports coming in unexpectedly and lowering prices very rapidly are quite a different thing from what I may call the steady, long-term invasion of the British market by overseas suppliers such as we have experienced in some other industries, notably some manufacturing industries where we have to accommodate ourselves to the changing pattern of the flow of goods.
As I have indicated in the figures a moment or two ago, the import share of our food market has, in fact, been falling over the years. The real trouble is the unpredictable way in which imports have fluctuated. As my right hon. Friend explained last week, agricultural production is going up in other countries just as it is going up in Britain. Overseas, as at home, more capital in the form of machinery, fertilisers and better strains of seed or breeds of animal are being used in agriculture so that output per acre and per man is rising all the time. The effective demand, however, for all this pro-

duction is not going up at the same rate either here or abroad, and so, in consequence, we encounter everywhere efforts to maintain a foothold in traditional markets or to capture a bigger share of whatever market may be going. So it is not surprising, really, that in these circumstances there are flurries of imports offered at almost any prices which they will fetch.
I think it was my right hon. Friend the Member for Thirsk and Malton who suggested that these imports were dumped. They are often referred to as dumped or subsidised imports, but it is not always necessarily the case that they are. For example, the increased supplies of Argentine beef which contributed so much to the dramatic fall in market prices earlier this year were not, as far as we can tell, subsidised supplies. They were coming on the open market, unsubsidised; although I appreciate that there are certain other cases in which imports reaching us are subsidised in one way or another.
One can argue, of course, that such imports coming in at very low prices are of benefit both to our cost of living index and also to our balance of payments, but the important point is that these imports at unduly low prices, despite the fact that the quantity is quite small in relation to the total supplies reaching our market over the year, can disrupt our market and cause a quite disproportionate increase in Exchequer costs; and it is in view of this that the Government intend to secure greater stability in the market for cereals and fatstock.
In working out arrangements to this end, one of the considerations which the Government will have to take account of will be our relations with our Commonwealth and other suppliers and our international obligations to them—and theirs to us, because they have obligations to us, as well as we have to them.
This is where I want to turn particularly to our international obligations. These are of two main kinds. First, there are the multilateral agreements of which the G.A.T.T. and the E.F.T.A. are obvious examples. I was glad to hear several hon. Gentlemen refer in kindly terms to the European Free Trade Association which is developing so very satisfactorily. These multilateral agreements, broadly, contain provisions directed both against the imposition for


protective reasons of import restrictions and also against any restrictions being applied in such a way as to discriminate between one overseas supplier and another. Then we have tariffs—

Mr. Maxwell-Hyslop: I think my hon. Friend is not quite accurate. That we must not discriminate between other members of the G.A.T.T. does not prevent discrimination against non-signatory countries.

Mr. Erroll: No, obviously not, because if they are not members of the club, so to speak, the rules do not apply; but, in fact, it is as a matter of sound commercial policy that we apply the G.A.T.T. principles to all our trading partners who are not actually themselves yet members of the G.A.T.T.
As to tariffs, we have committed ourselves in certain cases not to raise tariffs, but in the food field this mainly affects certain manufactured foodstuffs. The most part of our food comes in free of tariff, except where certain tariffs are imposed to provide Commonwealth preferences.
A more important point I should like to put to the House is that both under the G.A.T.T. and many of our longstanding commercial treaties we have undertaken to give most-favoured-nation treatment to other countries, to treat them, in fact, all alike, subject to the special preferences we extend to Commonwealth and the E.F.T.A. countries.
Secondly, we have many bilateral agreements with individual countries. The most important from this point of view are those with Commonwealth countries for so many of whom we have traditionally provided a market in return for preferences for our own exports. These obligations are, however, only one side of the picture. I think that hon. Gentlemen sometimes think that we are always hamstrung by obligations which we are in honour bound to keep, but I should like to remind the House that of course there is another side to the picture. In return we receive very substantial benefits for our worldwide trade, which is why we have accepted such obligations. We should not, therefore, lightly infringe undertakings which we have given, as to do so might well result in damaging our own interests.
My right hon. Friend the Member for Thirsk and Mahon, I think, rather twitted me at one time about my worldwide visits to try to reach agreements with countries far away from ourselves in order to secure more trade. But, of course, we want to secure more trade. It is very important that we should.
Here I want to make the point that it is what I call the multilateral type of agreement which is often the one which best suits our interests and best reflects the multilateral pattern of our trade, because—if I may show it by contrast—the bilateral attitudes of the Soviet bloc require us often to strike bilateral balances of trade with Eastern European countries. Even in this case we have to take account of their need to earn sterling and to buy goods from the less developed Commonwealth countries to whom they sell relatively little. But with the rest of the world our trade follows a freer pattern.
I want to emphasise how important it is to us, this problem of imports of agricultural products, against the background of our worldwide trading pattern. If we had ever to force our trade pattern into the straitjacket of too rigid a bilateral trade balance, that balance would certainly be struck at a very much lower level.
Commonwealth trade follows the same multilateral principle. We sell Australia more goods than we buy from her. We sell Canada and New Zealand much less than we buy from them.

Mr. Darling rose: —

Mr. Erroll: Yes, it is always difficult to get this right. In the case of Canada and New Zealand we sell them much less than we buy from them and therefore we have an adverse balance with those two countries.
Having explained the general worldwide pattern, I want to make the point that our international commitments and agreements are not a lifeless and rigid body of law imposing out-of-date restraints on our freedom of action but a pattern of contractual business relationships reflecting the pattern of our trade. These relationships are not fixed for all time, and it is practicable and reasonable to contemplate the negotiation of changes. But I stress the importance of trying to negotiate the changes.
Naturally, we should have to bear in mind that our overseas suppliers have a real interest in our market and we, in the same way, have a real interest in the market which they provide for our exports. Therefore, in seeking new arrangements, we must not lose sight of the overall balance of interest between us and them. Indeed, the problem in our market is but one aspect of what is an international problem in agricultural products.
The steep fall in prices on our markets, which results from the violent fluctuations in agricultural imports, also affects the returns received by our overseas suppliers. It is to their interest, therefore, as much as to ours, that we should succeed in putting a floor in the market. They would also benefit from the stabilisation of our market and therefore we would hope and expect to receive their co-operation in steps to this effect.
The aim which the Government have set themselves, therefore, is to secure changes which will remedy the damage done by the fluctuations of food imports on our market and agricultural support system, without bringing about greater damage to the interests of our export trade or to our domestic consumers. It might be possible, for example, to reach arrangements with overseas food suppliers to sell us smaller quantities of food at much higher prices. No doubt this would solve the financial problems of agricultural support for the home farmer, but we cannot leave out of account the resulting cost of imports to the consumer. I think that sometimes we talk about consumers as if they were some kind of special animal; but we are all concerned with the cost of living. It is important directly to our own standard of life and indirectly to the competitiveness of the exports on which we all rely.
The Government are, therefore, not prepared to base their policy on a long-term rise in the cost of food to the consumer. The object is to prevent sudden falls to quite unduly low prices. It is open to question whether they work their way through to the consumer, but very low prices cause hurt to the agricultural support system.
I therefore want to explain what we intend to do. In the coming months we shall be discussing cereals and meat in the specialist groups at the G.A.T.T. These are the important commodities, because they account for about 80 per cent. of the support payments, and if a practical solution is to be achieved it will be necessary to discuss the existing problems realistically and in detail. My hon. Friend the Member for Westmorland (Mr. Vane) referred to this as being an international problem. Certainly it is, and our hope is that we shall secure an international agreement to deal with what is in essence an international problem.
My hon. Friend the Member for Howden (Mr. Bryan) asked about the dates and how long all this would take. If such commodity agreements or other long-term arrangements cannot be achieved rapidly—and I regret that I cannot give my hon. Friend precise dates as early as this—it will also be our endeavour, whether as a result of these international negotiations, or as a result of the discussions which we are holding direct with our suppliers, to ensure that by one means or another interim solutions may be arrived at quickly, pending the more permanent arrangements. My right hon. Friend and I will push ahead with the international consultations, parallel with the discussions which he is having with the leaders of the home industry.
My right hon. Friend the Member for Thirsk and Mahon suggested that food imports should be the responsibility of the Minister of Agriculture rather than the President of the Board of Trade. I make no claim for a monopoly in this field, but I suggest that my right hon. Friend should consider the advantage of having in one Government Department general responsibility for Britain's commercial relations with the whole world, whether Commonwealth or foreign countries. In foreign countries our commercial representatives are part of the Foreign Office overseas staff, whereas in the Commonwealth countries they are appointed by the Board of Trade.
This makes no difference to the overall concept that one Government Department, whatever one calls it and whoever is head of it, should have sole responsibility for commercial relations, of which


agricultural interests are an important part. This is why I spend a good deal of time in negotiating agreements of a bilateral and multilateral character. I do that with the help of my officials because we are covering the whole field and not part of it. This is why I have to balance the advantages of the purchase of agricultural products from Poland against the advantages of increasing our export opportunities in that country, and so all the way round the world.
As for the negotiations which lie immediately ahead in the implementation of the policy announced by my right hon. Friend last week, I should like to make the important point that in all operations of this kind some give and take will be necessary on all sides. Granted this flexibility and desire to reach a solution of the problem, which affects other countries as well as ours, I am convinced that stabilisation of markets at broadly the present general level of prices can be achieved, not only for the benefit of the taxpayer and the farming community but to the advantage of the country' as a whole.

Question put and agreed to.

Resolved,
That this House welcomes the decision of Her Majesty's Government, to use measures of control of certain imports of foodstuffs as a means of stabilising the market for agricultural products in this country.

Orders of the Day — FINANCE BILL

Considered in Committee [Progress, 28th May].

[Sir ROBERT GRIMSTON in the Chair]

New Clause.—(EXTENSION OF RELIEF UNDER S. 9 OF FINANCE ACT 1956.)

(1) Section 9(1) and (2) of the Finance Act 1956 (which provides relief from income tax on certain savings bank interest), shall, subject to the provisions of the next following subsection, apply in respect of dividends on shares of a society registered under the Industrial and Provident Societies Acts 1893 to 1954, or under the Industrial and Provident Societies Acts (Northern Ireland) 1893 to 1955, and in respect of interest on deposits with such 4 society or with a registered friendly society, as they apply in respect of interest on deposits with the Post Office savings bank.
(2) Where by virtue of the last foregoing subsection the amount of surtax payable by an individual would exceed the sum of—

(a) the amount of surtax which would have been payable by him, if that subsection had not been passed, and
(b) the amount of relief, if any, to which he is entitled by virtue of that subsection,

that excess shall be disregarded for all the purposes of the Income Tax Acts.—[Mr. Houghton.]

Brought up, and read the First time.

6.59 p.m.

Mr. Douglas Houghton: I beg to move, That the Clause be read a Second time.

The Deputy-Chairman (Sir Robert Grirnston): With this new Clause the Committee can also discuss the new Clause "Reduction of rate of profits tax on co-operative societies, etc.", the new Clause "Building societies to be exempt from profits tax", the new Clause "Exemption of building societies from income tax and profits tax", and the new Clause "Exemption of building societies from income tax and profits tax (except in respect of profits from special advances)". The Committee can divide, if required, on the second and penultimate Clauses.

Mr. Houghton: In moving this new Clause I should also like to deal in a preliminary way with the second and third Clauses that you have mentioned, Sir Robert.
The Clause proposes that the concession now given to Post Office Savings Bank interest and interest in the ordinary bank of the trustee savings bank for Income Tax purposes should apply to share interest, loan interest of registered industrial and providence societies, and to deposit interest payable by registered friendly societies.
The Committee is fully aware of the fact that the first £15 of Post Office Savings Bank interest and of the interest on deposits in the ordinary branches of the trustee savings bank is exempt from Income Tax, but not from Surtax. The second new Clause proposes that the Profits Tax now levied on industrial and provident societies at the rate of 15 per cent. should be reduced to 3 per cent. The third new Clause proposes that complete exemption from Profits Tax should be granted to building societies on their residual surpluses. That Clause is one of three dealing with taxation on building societies.
The fourth and fifth of the new Clauses which we are discussing also deal with the taxation on building societies but propose to go further. Indeed, in the fourth the Liberal Party would go very much further than what is proposed in the Clause that I have moved.
I suppose that few topics have been so frequently and thoroughly debated as this. Royal Commissions and other bodies have considered them and debates on successive Finance Acts have gone over the ground again and again. What encourages my right hon. and hon. Friends and myself to persevere is that nothing that any Treasury Minister said last year, or the year before, or the year before that, or the year before that, will necessarily be Government policy today. That is a most comforting thought at this moment. No Government have performed more somersaults on the Floor of the Committee than this one during the course of our proceedings on this Finance Bill.
The Financial Secretary has the distinction of recommending to the Committee proposals which he opposed on earlier occasions. He has been quite unabashed, undaunted. He is, I think, a political jockey who is prepared to ride any horse from the Government stables, even if it

runs this year in the opposite direction from last.

The Financial Secretary to the Treasury (Mr. Anthony Barber): May I inform the hon. Gentleman that the horse I backed this afternoon did just that?

Mr. Houghton: I acknowledge at once that the hon. Gentleman is an extremely lucky man, otherwise he would not be sitting there. He has survived purges. His contradictions have not disturbed his repute on the Government benches. If he gets thrown in the course of the race, he will climb back in the saddle even if he finishes up back to front. With such a versatile horseman anything can happen, and we hope that something will happen on this new Clause tonight.
The Clause refers to interest on savings in co-operative societies and registered friendly societies. On a previous occasion, the then Financial Secretary, now Minister of Education, referred to the conditions under which the concession was first given, in 1956, to Post Office Savings Bank and trustee savings bank interest. He said that two conditions were laid down. The first one was that the rate of interest must be static at 2½ per cent. The second was that the money should be lent direct to the Government, that being the case in connection with Post Office deposits and, by arrangement, also with trustee savings bank deposits.
The Minister said:
My right hon. Friend was not just seeking, in a general way, to encourage small saving. The whole point of the concession was to encourage small savers to make a kind of voluntary contribution to the Budget surplus at a time when, as now, budgetary policy was a factor of first-class importance for the management of the economy."—[OFFICIAL REPORT, 20th June, 1961; Vol. 642, c. 1258.]
That was two years ago and referred to a concession given in the conditions of 1956.
We on these benches think that some fresh consideration should be given to the restrictions which have been maintained so far on this concession for Income Tax purposes. I cannot quote the Royal Commission in my support in this connection, because it was against this form of tax relief and recommended accordingly. Notwithstanding that, the Government introduced this concession within about a year of the final Report of the Commission.
We think that now we should not stop at the limit of the 1956 concession. Nor do we believe that the arguments used in 1961 by the then Financial Secretary are necessarily conclusive today. The other day I came across an interesting little pamphlet which says that
A tax-free income of £15 per annum is permitted on interest from deposits in the Post Office Savings Bank and interest on National Savings Certificates is untaxed. This position should be rationalised in order to emphasise the need for investment in industry as well as Government-sponsored savings schemes. The tax-free level should be raised to £25 and extended to include all investment income.
The committee may think that that is from a brash pamphlet issued by the Liberal Party. In fact, it is a memorandum by the Young Conservatives, who recently produced some very interesting and thought-provoking suggestions on the future of taxation. It is issued under the emblem of the Young Conservatives, which shows a blue lion rampant with tongue fully extended in the direction of his leaders. I think that that is an encouragement to go on, notwithstanding the disappointments of past years.
The Economic Secretary should address himself to this question. In the light of the Government's new economic policy, what is the rôle of small savings today? Does the Chancellor of the Exchequer want them, or does he not? The Chancellor recently delivered a rude shock to the National Savings movement when he suspended the last issue of National Savings Certificates. He says that the idea that he did it to interrupt the rhythm and flow of savings was nonsense. He still wanted people to save, but he had to stop them doing it while the printing presses got ready for the new and less attractive issue.
At a time when we are boosting the economy, when inducements are being given to consumer spending, when the concept behind the Budget is expansion and the raising of the level of demand, it would be as well if the Chancellor were to define in this situation the rôle of small savings. If he wants to encourage them, not only for Government sponsored projects, but for the expansion of the economy generally, he might well adopt the proposal that we make in the new Clause, "Extension of relief under Section 9 of Finance Act 1956".
Further, in this situation the Chancellor should emphasise that saving is the policy of individual prudence, quite apart from economic considerations. Savings are encouraged through endowment insurance policies on a large scale. Institutions are amongst the biggest investors of small savings in the country today. Savings in co-operative societies and in friendly societies are merely another form of personal saving for prudence sake as well as for economic purposes. Therefore, they may serve two objects—to offer a degree of individual security to the saver, and, at the same time, to provide some resources upon which the Chancellor and others could draw for economic expansion at the present time.
I believe that the cost of the Clause would be about £2 million. The cost of the existing concessions as regards Post Office Savings Bank and trustee savings bank interest is about £12 million. But, as is customary on these occasions when the cost of the concession asked for is small, Ministers frighten the Committee by saying that it would not stop there. If the concession were applied to the extent proposed by the Young Conservatives in their interesting pamphlet, the total cost might be as much as £38 million. We are not asking for that. We are a little more realistic and a little more modest in our proposals.
I pass to the new Clause, "Reduction of rate of profits tax on co-operative societies, & c.", which I wish to bring into the discussion of the trio of new Clauses that I am sponsoring at the moment. The history of the taxation of co-operative societies is, in my opinion, a sordid one. The Industrial and Provident Societies Act was passed in 1893. They were not then liable to Income Tax. They remained exempt from Income Tax until the Royal Commission on Taxation of 1920 had a disagreement as to whether co-operative societies should be brought within the scope of taxation.
By a majority, the Royal Commission recommended that they should, but nothing was done about it. It was too controversial for anything to be done about it until in 1932 another Committee was set up—a departmental committee called the Raeburn Committee. It recommended that co-operative


societies should be taxed on their profits just as if they were limited liability companies, without any deduction for interest on shares paid to their members.
In 1933—there are some hon. Members here old enough to remember 1933—when the most reactionary Government of all time came to office on the biggest artificially stimulated wave of panic that our political history has ever known, the late Mr. Neville Chamberlain decided to bring co-operative societies into the scope of Income Tax. The reactionaries had their day of triumph under a Tory Chancellor in a reactionary Government in 1933.

Sir Cyril Osborne: Led by a Socialist Prime Minister.

Mr. Houghton: Led by a Prime Minister. I do not think that we should affix labels on all Prime Ministers.
Then the Royal Commission of 1955 recommended applying the undistributed Profits Tax, or if a flat rate were introduced the flat rate of Profits Tax, to co-operative societies. The rate of Profits Tax charged on Co-operative societies went up from 3 per cent. to 10 per cent., then to 12½per cent., then to 15 per cent.; but in fairness I must add that in 1958, when the recommendation of the Royal Commission of 1955 was implemented, a change was made in the basis of the assessment of cooperative societies and share interest paid to members became deductible from the surplus for taxation purposes. The new Clause seeks to restore the rate of Profits Tax to 3 per cent., as it was before, but I candidly say that we do not propose to reverse the favourable change in the basis of assessment which was made in 1958.
7.15 p.m.
In an earlier debate on this matter, so far as speeches by Ministers then are relevant today, the present Financial Secretary said this:
However, the over-riding objection to giving cooperative societies the special relief of Profits Tax which is sought in these Amendments is that it would be most unfair to their trading competitors."—[OFFICIAL REPORT, 14th June. 1961;Vol. 642, c. 446.]
How come? This concession would not lead to a price war with private shopkeepers and multiple shops. It would not mean a higher dividend to the share-

holders, which, in any case, is taxed on the recipient. It might help to restore the dividend on purchases to a level more like it used to be. To suggest that this concession would be unfair to the competitors is to misunderstand the mutual aspect of a co-operative enterprise.
I should add that my hon. Friends will supplement the case that I am making at present, both in respect of co-operative savings and Profits Tax on co-operative societies. I am a sort of curtain-raiser to give my hon. Friends the opportunity of taking the measure of hon. Members opposite, seeing what substance they are made of, and deciding whether it is worth while expending too much eloquence upon the driblets of the Conservative Party opposite, or whether my hon. Friends should fix their gaze on the Economic Secretary and regard him as the only Member on the benches opposite worth while talking to in present circumstances. Before there is any comeback on that, I will pass quickly to building societies.
Here, the Committee has a choice of three: the realistic and more modest new Clause, "Building societies to be exempt from profits tax", the more radical proposal of the Young Conservatives in the new Clause, "Exemption of building societies from income tax and profits tax", and the more drastic—

Mr. William Clark: That is the Liberal one. The hon. Gentleman must not confuse the Young Conservatives and the Liberal Party.

Mr. Houghton: I mixed them up.
Our new Clause deals with Profits Tax only. The other two new Clauses deal with Income Tax as well as Profits Tax, though they are not precisely the same in their effect on buildings societies. Profits Tax paid buy building societies in 1961–62 was about £3¾ million. Income Tax was nearly £10 million. That disregards the tax paid by the building societies to the Inland Revenue in the composite rate on share and deposit interest paid, so that over £14 million is blatantly extracted from a property-owning democracy.
There is nothing that hon. Gentlemen opposite—perhaps I had better not say what I was going to. This is not an occasion for invective. I want to put my case calmly and persuasively to the


Economic Secretary. I want him to say that as usual I have made my case in my customary courteous and persuasive way, because then I shall know that I am to get nothing.
This is a proposal to relieve building societies of Profits Tax. I believe that there is a case—though I do not put it today—for relieving them of Income Tax as well. I think that in the light of this Finance Bill we have to get away from the conventional outlook of the Royal Commission on the principles of taxation. This Bill definitely leads us away from that. The abolition of Schedule A tax on owner-occupiers, reported against by the Royal Commission, has been adopted by the Committee and it has been put to the country as an act of social policy. Free depreciation in development districts, denied to the rest of the country and a radical departure from the concept of equality in taxation, is an act of economic policy.
Hon. Gentlemen opposite have come, belatedly, to accept discriminatory taxation for social, economic, and similar purposes in the national interest. Discriminatory taxation is now an instrument of social and economic policy. I do not often refer to what I said in the past, because I am never proud enough of it, but I said in 1961 that it was time to have a reappraisal of the rôle of building societies in the housing programme. The case for that is just as strong today, and I believe that we have to consider the rôle of building societies in the housing programme of tomorrow.
Look at the White Paper on Housing, the latest of the Conservative Party's electioneering pamphlets. Paragraph 39 refers to the importance of the rôle of the building societies in this new housing drive. The Housing Corporation will not be able to function unless building societies are prepared to pour money into the local housing associations, and in paragraph 39 we read what they are expected to do:
…the expectation is that the greater part of the money required by the housing societies will come from the building societies and other private sources.
In this connection, as in connection with the private owner-occupier buying his house through a building society, there is an urgent need to get interest rates

down. How can the prospective home owner cope with the combined effect on a limited income, of rising interest rates and rising building costs, and the astronomical rise in the price of land? This is at the root of the problem.
I will not pretend that to relieve building societies of Profits Tax alone would enable them to reduce their interest rates. It would not. If they were relieved of Income Tax as well, however, I feel sure that it would, but I think that what is necessary now is a re-examination of the rôle of building societies in the housing situation of today in view of the heavy reliance now being placed on these societies for the fulfilment of the aspirations of right hon. and hon. Gentlemen opposite for a property-owning democracy. They should be taking the step which I am suggesting now, and we hope that this fresh look at matters which we have discussed in years gone by will bring forth a new point of view on these proposals.
We do not want the Economic Secretary merely to repeat what has been said in previous debates. He probably has a brief which is exactly the same as the brief of last year, and that of the year before, except that it is now duplicated on black-edged notepaper and is headed, "Death to Their Hopes". This is an opportunity for the Economic Secretary to make a different speech from that made by his hon. Friend the Financial Secretary. This is an opportunity for him to show that the Government are as forward looking as they claim to be. This is an opportunity for right hon. and hon. Gentlemen on the benches opposite to strike a new blow for the property-owning democracy which they love.

Mr. T. H. H. Skeet: Hear, hear.

Mr. Houghton: All right. Let us have a response on that note. I shall spoil it if I say a single word more.

Mr. W. Clark: It is always a pleasure to follow the hon. Member for Sowerby (Mr. Houghton), even though on this occasion he mixed up the Liberals and the Young Conservatives. I am delighted that he appreciates that the Conservatives in this Committee are at least young in idea and in freshness of thought.


I felt that the hon. Gentleman was inclined to accept the new Clause—"Exemption of building societies from income tax and profits tax (except in respect of profits from special advances)"—rather than the new Clause moved by him and that tabled by the Liberal Party—"Exemption of building societies from income tax and profits tax". As the hon. Gentleman said, there is a feeling in the country that the rise in mortgage rates is hitting the small owner-occupiers. Not all these people live on fixed incomes, but they are finding it difficult to meet these rising costs. Having entered into a commitment with a building society to pay interest at 4½per cent. or 5 per cent., because of the dependence of the building society industry on market rates the societies have to borrow money at higher rates, and, in turn, have to charge the owner-occupiers more for the money they lend them.
It is worth recording that although building society rates have gone up by about 20 per cent. since 1951, wages have gone up by 70 per cent. It is also fair to make the party point, following the example of the hon. Member for Sowerby, that under a Socialist Government it is true that mortgage interest rates were about 4 per cent. and they have risen since, but we must add that under a Socialist Government, up to 1951, only about 30,000 people a year were able to borrow money to go into owner-occupation of houses, whereas under the Conservatives the figure has risen to between 120,000 and 125,000 a year. More people are buying their properties despite the fact that mortgage interest rates have risen.
7.30 p.m.
I wish to refer in particular to the new Clause in my name and the names of my hon. Friends. We have tabled this new Clause deliberately not only to take in Profits Tax on surpluses but also Income Tax on surpluses. The cost, if the Clause proposed by the hon. Member for Sowerby were adopted, would be about £14 million. If the building societies were relieved in this way it would allow them to reduce their rates by about ¼ per cent. A quarter per cent. reduction is not much to the owner-occupier who is feeling the pinch, but in our new Clause we have gone further and said that Income Tax

on the building societies should be absolutely abolished.
If this were agreed the composite rate which the building socities pay to the Exchequer would be abolisheed. It is fallacious to think that an investment is free of tax. They do not get interest free of tax. The tax gatherer collects his rate; he collected in 1961–62 about £39 million. If the revenue were to forgo that it would mean a loss of £39 million, plus the £14 million Profits Tax on surpluses, a total of just over £50 million. In logic it is very difficult to substantiate a plea to give one industry—the building society industry—relief of £53 million, but we have to look at our whole tax system and be more and more discriminatory. No one, particularly on these benches, will refute the argument that a property-owning democracy is good for the country.
One of the greatest advantages of owning one's house is, without talking airy-fairy nonsense, that it gives a person a sense of security and a sense of responsibility. I am sure that is a good thing. It is interesting to note, in parenthesis, that this makes the person a capitalist. My only criticism of the capitalist system is that in this country there are too few capitalists, and we want more of them. I said that I did not think that in logic we could possibly argue this case, but concerning social factors there is a very strong case for increasing the property-owning democracy.
If it is considered right for the public purse to pay out £80 million in subsidies to council house tenants—and I am not arguing that that should not be paid out —that is a political decision and does not bear logical analysis. It was a political decision made rightly or wrongly, and to exempt building societies from Income Tax on the composite rate and on the surplus and from Profits Tax on the surplus would have to be a political decision. No doubt my hon. Friend the Economic Secretary will say that the Chancellor in this Budget has relieved taxation to a tremendous amount. There is no question that he has. The Chancellor never gives anything away, because he has nothing to give; it is forbearance from taking so much from the taxpayer. Probably £50 million this year would be too much, but I urge him that a political decision must be taken soon


to create in this country more and more property owners.
One way in which that can be done is to relieve building societies of Income Tax on surplus and Profits Tax on surplus. When my hon. Friend replies he may give us the "brush-off", but I want him to hold out hope that this may be done in the next Budget, or in the year after that.

Mr. Donald Wade: Personally, I am not expecting a "brush-off" although it would not be the first time we have had it. I do not think one should be quite so pessimistic.
You have indicated, Sir Robert, that we may discuss in this debate the Liberal new Clause "Exemption of building societies from income tax and profits tax". The object of that Clause is to relieve building societies from liability to Income Tax and Profits Tax on their surpluses. Those who have taken part in previous debates on this matter will agree that the existing tax on surpluses is not based on any logical principle but is due largely to fortuitous historical circumstances.
The debate tonight is an omnibus debate dealing with a number of separate subjects. The only common feature is the claim for some relief from the burden of tax, but that is common to most debates on the Finance Bill. I understand that the Clause moved by the hon. Member for Sowerby (Mr. Houghton) proposes that the first £15 of dividend and shares and deposits held by an investor in a co-operative society shall be exempt from Income Tax. The concession is similar to that granted on the first £15 of interest invested in savings banks which was intended to encourage savings. In previous years I have advocated an extension of the concession to other forms of saving. Therefore, I have no objection in principle to the proposal in the Clause, which, if adopted, would strengthen the case for considering other savings institutions such as building societies.
It must be remembered that building society investors at present receive no benefit whatever by way of relief from taxation. I stress that. It is important to appreciate the way in which building societies are taxed. Investors in building

societies are not relieved from tax. They receive their interest free from any deduction of tax because the tax which would be payable has been accounted for by the building society to the Treasury by way of composite rate.
Account is, of course, taken of the fact that some who invest in building societies have incomes below the level of liability for Income Tax, but the Exchequer does not lose. The composite rate is calculated by reference to the total amount which the Exchequer would receive if each investor had to pay that Income Tax direct. The Exchequer gets its full pound of flesh. It may well be that the Treasury gains owing to the administrative saving resulting from the arrangement it makes with the building societies.
If relief were granted on the first £15 of interest for building societies also, this would alter the composite rate and would be of some benefit to the building society movement, that is to say, to those who invest in and borrow from building societies. Therefore, if the idea were extended it would be reasonable to apply it to building societies but I am not pressing that. In my proposal I am tackling the subject from a different angle.
In addition to paying the composite rate, building societies pay Income Tax and Profits Tax on the residual surplus. This surplus is not income in the strict sense. There are statutory provisions which have to be observed in investing the surplus. It must be remembered that there are no equity shareholders in a building society and no ordinary shareholders to whom any part of this surplus could be paid. The only persons who could benefit by a relief of taxation on building societies surpluses would be the home buyers. They would benefit in two ways if this relief were granted.
First, they would benefit by some reduction in interest charges. I agree that if it were only on Profits Tax, as proposed by the hon. Member for Sowerby, it probably would not be possible to bring about any reduction in interest rates. It is only if relief is granted from both Income Tax and Profits Tax that some reduction in interest rates would be possible. Secondly, they would benefit by the fact that building societies would be able to build up their reserves more


rapidly and thus, by expanding their services, would help to meet the requirements of all those needing building society mortgages.
In view of the White Paper to which the hon. Member for Sowerby referred, there could scarcely be a more appropriate time to abolish Profits Tax and Income Tax on building society surpluses. The Government want the co-operation of the building societies, and their association has promised support for the programme of building houses both for home ownership and for rent through housing societies. In paragraph 32, on page 6, of Cmnd. 2050, it is stated,
The Government have had discussions with representatives of the Building Societies Association about the possible need for giving more help to people in a sound position…who are anxious to buy a house.
I understand that a public statement has been made to the effect that the building societies are very willing to co-operate in this programme. In paragraph 36, on page 7, we read,
The building societies can play a major part in this new development. A few societies have indeed already shown willingness to lend money to housing societies building to let, and the Government now wants to enlist the support of the whole building society movement.

Mr. Hocking: It is housing associations.

Mr. Wade: Housing association is the name used in the Bill, but in the White Paper there is a reference to housing societies, and I am quoting from the White Paper. It continues:
Discussions have taken place with representatives of the Association and they have agreed to recommend that societies should co-operate in the following scheme.
Proposals then follow about setting up housing corporations, and there is a reference to houses owned on a co-ownership basis. I think that this is the first time that the word "co-ownership" has appeared in an official document. My colleagues and I have been advocating co-ownership for many years. Obviously we are making some progress.

Mr. Oram: Is it not a fact that it is co-operative societies which are being advocated, and are not the Government being a little coy in not using the word "co-operative"?

Mr. Wade: I will not argue whether the Government are being coy. I only draw attention to the fact that the word "co-ownership" is used. I understand the sense in which it is being used, and I have advocated this proposal in past years. But it would be out of order for me to dwell at length on the White Paper. I merely say that there is a certain amount of pie in the sky in it, and vague hope, but the objective, at any rate, is right.
This tax on building societies' surplus is in the nature of a penalty. The late Mr. Glenvil Hall, who I think all hon. Members agree always spoke with moderation, used quite strong words in the debate last year. On 30th May, 1962, he said:
The Government, instead of penalising building societies, should recognise their value.
He also said,
Is it not grossly unjust to treat building societies in this way? They help people to save and provide houses for those who need accommodation. They assist the Government in every possible way. It is unfair that these societies should be mulcted in this fashion."—[OFFICIAL REPORT, 30th May, 1962; Vol. 660. c. 1379–80.]
No satisfactory answer has ever been forthcoming from the Government to show why this tax on surpluses should continue. I am aware of the arguments which have been developed from time to time, but I do not think that they stand up to examination. The Government may say that they are anxious not to create a precedent, but I do not think that they would be doing so in relieving building societies of this burden. Indeed, I think that we have a new precedent which might well be followed, because by virtue of Clauses 42 and 65(4) the housing associations will be relieved from Profits Tax and Income Tax. As authority for that I can quote the observations of the Joint Parliamentary Secretary to the Ministry of Housing in the short debate on Clause 42. Referring to this Clause on 23rd May, 1963—he used the words co-operative housing association —he said:
The Clause provides in effect that the associations are to be treated as collective owner-occupiers.
—we have a variety of names—
The relief, therefore, is twofold. In the first place, the association will not be charged with Income Tax or Profits Tax on the rents which it receives from its members. In the second place, each member will be allowed


relief where appropriate on as much of the interest paid by the association as is attributable to the property which he occupies."— [OFFICIAL REPORT, 23rd May, 1963; vol. 675, c. 656.]
7.45 p.m.
If one follows that to its logical conclusion, the rent which a co-owner pays is similar to the mortgage interest which a home buyer pays to a building society. There is a very close relationship between the exemption from Profits Tax and Income Tax of these housing associations and the case which I am making for relief for building societies.
It must be remembered that building societies are not engaged in trade and therefore it cannot be contended that they are in competition with some trading body. They are not operating in competition with any form of retail trade. They are in competition only with the national savings movement. Building societies are the only form of savings institution in which neither the investor nor the institution is accorded any Income Tax relief.
Some people may think of the building society movement in terms of attractive and substantial office buildings where the business is carried on, but it would be fairer to think of the movement as one which benefits large numbers of people who are buying their own homes and who would be unable to do so without the help of building society mortgages. Unfortunately, there are many thousands of people who either cannot find a house to buy or cannot afford to pay the price when they find it, and I regret to say that the prices of houses are still rising.
In an interesting leaflet published by the Building Societies Association, No. 38, there are figures of the index of house prices. I will not burden the Committee by reading out the figures, but they show a steady pattern of rising prices. It reads:
it will be noted that the upward trend in the price of new houses continues. The provisional figure for the March quarter of 1963 has risen by four points over that for the December quarter of 1962, the biggest increase in a single quarter since the table was first compiled in 1956.
It rightly points out that the index covers the whole of Great Britain and that similar indices for similar regions, such as the London area, would show marked variations. Even if the proposals in the

White Paper were carried out—and obviously much of it is hope—and even if the hopes were fulfilled, the Government would be only too willing to take any practical steps which would be of assistance.
It is true that a number of proposals have been put forward to make it easier to own one's home, and some are already in operation. For example, there are cases in which 100 per cent. mortgages are available for which a long term is granted. but it is as well to remember that there are some disadvantages as well as advantages in this. It is not a complete solution.
If one pays a very small deposit and obtains a long-term loan, interest inevitably forms a very large part of the monthly repayments in the earlier years. For example, if a young couple buy a house on a 95 per cent, mortgage for a term of 30 years or over, they may find that in five years' time, when for some unforeseen reason, such as a change of occupation, they have to move, the monthly repayments will have had comparatively little effect on the total capital owing on the mortgage.
The amount of the deposit is also an important factor for anyone buying a house, but the aim should be to lessen the overall cost of home buying. There are three factors which contribute to this: one, the price of land; two, the cost of building; and, three, the amount of interest paid on the money which is borrowed. I should be out of order if I were to discuss the rising price of land or the methods of reducing building costs. I will only say that I hope that there will not be a scramble for land between the new housing corporations, the local authorities and private developers.
The matter of interest rates is very relevant to this Clause. The building society movement is in competition with the savings movement, and interest rates are, of course, affected by Government policy. Anything that could be done to reduce interest rates would be a useful step in the right direction. It is clear that if the tax, which I regard as an unjustifiable tax, on building society surpluses were abolished, it would make possible some reduction in interest rates. It would, at any rate, be of some real help.
The Chancellor has, of course, to consider the loss of revenue. The figure of £14 million was mentioned. According to my calculations, in the last year over £11 million was paid in the form of Income Tax on the residual surplus of building societies and over £4 million in Profits Tax, making a total of £15 million. I shall not argue whether it is £14 million or £15 million. If this tax had not been imposed, the sum involved would either have been devoted to building up reserves or facilitating home buying. In either case it would be encouraging saving and would not represent any real loss of revenue. That is the crux of the problem.
We have had many debates on this subject and there is very little new to be said about it. We have heard the case from the Treasury Bench many times. I think that we have now reached the stage when the Government should give way. I hope that the Minister will do so graceully—and this year is the time when it should be done.

Mr. Philip N. Hocking: I do not want to follow the hon. Member for Huddersfield, West (Mr. Wade) into the realms of vocabulary and political slogans. Nor do I want to follow him in the delightful way in which he ran through my right hon. Friend's White Paper, which was published yesterday. I was, however, intrigued with one point which he made. I do not think that he quoted with due fairness from the building societies' publication with regard to the increase in the cost of housing from one quarter or another. He did not say, as I thought he ought to have said, that the increase in cost was directly attributable in the first quarter of this year to the increase in wages that had to be paid. This is a fact which is inescapable. I have seen the cost rise over the last 12 or 15 years by 100 per cent., and I think that it would have been worth while if he had mentioned this increased cost which has been largely attributable to increased wages paid.

Mr. Donald Chapman: rose—

Mr. Hocking: I do not want to give way because I want to pursue the argument with regard to building societies and support the case made by my hon.

Friend the Member for Nottinghamshire, South (Mr. W. Clark).
This matter in regard to building societies has been debated over and over again, both by my hon. Friends and by hon. Members opposite. We all know the history of this taxation. We have had the facts given to us in this House and from people outside as to the whys and wherefores, and I think that it is true to say, as the hon. Member for Huddersfield, West said, that no one accepts that the tax charged on building societies is justifiable.
We know the importance of the building society movement, and it is significant that this matter has been debated every year since 1958 on every Finance Bill. In each of those debates it has been stressed that building societies are not trading undertakings as we know them. I believe that they are entitled to some special consideration, such as my hon. Friends on this side of the Committee have set down in their new Clause.
Building societies fulfil a unique service. They channel the funds or money from those people who have a surplus to those who need to use it to house themselves. Why should extra taxation be taken by the Exchequer in this processs? Last year the building societies paid some £4 million in Profits Tax plus the other sum, making a total of between £14 million and £15 million. It seems wrong to me that the Chancellor should take money in this way merely because it is being channelled from one section of the community to another and used in a worth-while cause. This work should be encouraged still further. It is obvious that it will need to be encouraged still further in the years that lie immediately ahead. I hope that home ownership will be encouraged by everyone who takes part in the political life of this country.
If we are to encourage home ownership, the cost to the borrower should be kept to the absolute minimum. It is perhaps not surprising, in view of what lies ahead in the next 12 or 18 months, that practically all parties at the present time are united in wanting building society interest kept to the absolute minimum and cheap money made available for those who wish to provide themselves with housing accommodation. I think now, and I have always


thought, as I know that most hon. Members have on this side of the Committee, that the question of home ownership is most important.
8.0 p.m.
If my hon. Friend would give way now or on a future occasion on the lines suggested, the Building Societies Association has said that it would recommend to all its members a reduction of¼per cent. in the interest charged to borrowers. This may not be very big, but it would be a step in the right direction. It would mean that the standard rate charged by societies could be reduced to 5¾ per cent. The relief would be felt by a section of the community which has carried a large burden of the cost of running the country in the last few years, carried it not only in taxation but in considerable sums in rates. My hon. Friend the Member for Nottingham, South mentioned the subsidies paid to local authority tenants. There is a fair case to be made for home owners to receive some relief.
The hon. Member for Sowerby (Mr. Houghton) spoke of the merits of the various Clauses under discussion. Our new Clause—"Exemption of building societies from income tax and profits tax (except in respect of profits from special advances)"—is the fairest of the lot in this respect. We are honest enough to say that we want the benefits of this change to go only to home owners and home occupiers and that we do not want special consideration to be given to that section of building society business which comes under the definition of special advances in the Building Societies Act.
I know that this is only a small part of the business, but we feel that home owners and would-be home owners deserve some consideration, and we have deliberately excluded the special advances which could be said to be normal commercial business.

Mrs. Joyce Butler: I will confine what I have to say to the new Clause which has been so vigorously moved by my hon. Friend the Member for Sowerby (Mr. Houghton). He indicated that its purpose was to extend to interest on co-operative shares and penny bank accounts the concession made in the

1956 Act by which the first £15 of interest on deposits in the Post Office Savings Bank and in the ordinary depart-meats of the trustee savings bank is exempted from tax.
After listening to the debates on this subject in recent years, and studying the replies from the Treasury Bench, I have been puzzled to know why the reasoned arguments from this side of the Committee have been unable to penetrate the inflexibility of hon. Members opposite. The attitude of the Government has been rather as though they were promoting an exclusive kind of small savings club. Year after year they have said that they were not prepared to vary the rules by one iota to accommodate the small savers of co-operative societies. They themselves have made the rules and they can perfectly well change them if they so desire. The arguments from this side of the Committee have been sufficient to indicate that they should change the rules and be less inflexible than they have been in this respect.
It is quite clear that the Government have appreciated that the Co-operative movement is a savings movement. For example, they recognise that, in 1961, £302 million were invested by small savers in co-operative societies of which the considerable sum of £255 million was in share capital. The Government have recognised that this considerable sum is an accumulation of very small amounts by 13 million members of co-operative societies of small amounts averaging about £20. All this has been recognised, but still the Government have not given way.
They must also recognise that not only is the Co-operative movement a savings movement in the sense in which we understand the word, but it gives special facilities for encouraging saving. One could say that a co-operative society has a built-in savings incentive by the very principle of co-operation and the machinery provided for enabling members to keep their dividend, which is a form of deferred discount, in their share capital account instead of drawing it out. It does more than any other institution to encourage members to save year after year in this way. Yet we have not succeeded, during all the years in which this matter has been debated, in persuading the Government to give co-operative


societies the facilities given to the Post Office Savings Bank and the ordinary departments of the trustee savings bank.
The Government know that there is a statutory limit on co-operative shares of £1,000 and on penny bank accounts of £50, and that these are, therefore, small savings. There is no question of big savings. There is a ceiling on the amount of interest paid by co-operative societies, which is about 3 per cent., so that the rate of interest is extremely small. About 34 per cent. of the money saved is invested in Government securities so that a large part of the money saved goes in Government securities. These are all matters on which the Government have insisted.

Mr. Percy Holman: Out of the £300 million which has been invested in co-operative societies, £191 million has been reinvested and not used in trading or production. Out of that £191 million, approximately 34 per cent. is invested in Government and local government securities.

Mrs. Butler: For the sake of time, I rather telescoped the argument, but I am assuming that the Government know all these things and I am just reminding them of them. Assuming that they do, it is difficult to understand why they continue their discrimination against the co-operative small saver.
It is all the more difficult to understand because in the Bill, in Clause 42, the Government have gone out of their way to assist co-operative housing associations. They have taken up something which has interested me for a long time, the difficulty which members of cooperative housing associations have in respect of Income Tax. Those members are now brought into line with ordinary owner-occupiers. In the Clause, which is complex, the Government have dealt with a much more abstruse principle for which it is much more difficult to draft than this very simple Clause which we now advocate and they have also acted very quickly.
Following the introduction in the 1961 Housing Act of their support for cooperative housing associations, in this Finance Bill they have seized the difficulty of members of co-operative housing associations with Income Tax and have formulated an answer to the problem and

included it in the Bill. If they could do that and if they could see that and if they could find an answer to that problem, I cannot follow why they cannot see this point about co-operative small savers and find an answer to it.
The Government do not say to members of the co-operative housing associations, "You must change your rules in order to fit in with the Income Tax regulations"; they have changed the Income Tax regulations in order to accommodate members of co-operative housing associations. What we are now asking is that they should change the Income Tax regulations in order to accommodate cooperative small savers.
The principle is exactly the same. If one follows the avowed intention of the Government in the White Paper on Housing, which is to end tax discrimination against co-operative house owners in order to encourage co-operative housing associations as part of the general housing contribution, why do they not use the same principle and end tax discrimination against co-operative small savers and encourage them as part of the general small savings' contribution to the national economy?
The Treasury Bench could make a break-through this evening and support what my hon. Friends and I are suggesting. I cannot see how the Government can fail to accept this argument, since, in Clause 42, they have already taken action on another aspect of the Cooperative movement. We are jealous of the rights of the individual. We are concerned to see that justice is done, even when relatively small matters are involved.
I ask the Treasury to realise that the small savers to whom I am referring represent some of the finest people in the country. The Government are frequently saying that people should try to help themselves, and these people are doing just that. They are seeking to help themselves by the principle of co-operative self-help and they deserve better treatment in this respect than they have had.
I hope that, for all these reasons—in the name of logic, above all—the arguments which we have adduced to benefit the people who are using their initiative in an effort to help themselves through their small savings will not be met by the


Government repeating the arguments they have used in previous years, but that they will support our claim.

Sir C. Osborne: The hon. Lady the Member for Wood Green (Mrs. Butler) has made a persuasive and attractive speech on behalf of the small savers in the co-operative savings movement. For over 100 years this movement has undoubtedly been one of the finest organisations of its kind in the country and has done a great deal of good work, particularly for the poorest section of the community. Whatever we can do to help in this direction would receive my support, although I do not necessarily go all the way with the hon. Lady in supporting the proposed new Clause entitled "Extension of relief under s. 9 of Finance Act 1956." But in her aim to protect and encourage small savers I am with her one hundredfold.
The hon. Member for Sowerby (Mr. Houghton) said that there had been in power in 1933 probably the greatest reactionary Government of all time—or words to that effect. I would remind him that that Government was originally led and inspired by the three famous founders of the Labour Party; Ramsay MacDonald, Jimmy Thomas and Philip Snowden, and I should have thought that he would not have regarded such saints in those terms.
He also said that we must look to the building societies to provide the money for the new housing drive. That is going to be grossly unfair to the savers for whom the hon. Member for Wood Green pleaded, for it would mean that we would be providing money to the borrowers, money which would grow in value, at the expense of those who lend their money. They would be swindled and robbed of their savings through inflation.
The proposed new Clause does not get my support because it does not go far enough. It fails to tackle the real problem of savings which faces us. It is like giving a poor patient an extra lump of sugar in the hope that it will cure a complaint like cancer; in this case, financial cancer. The Clause, so the hon. Member for Sowerby claimed, would cost only £2 million whereas the previous concession given by the then Chancellor in 1956 cost £12 million. This was followed by the

hon. Member asking, "What is £2 million today if it will encourage the small savers?"
8.15 p.m.
Why did the hon. Member stop there? Why stop at those two extra types of savers? If it was unjust to have selected two classes of people in 1956, it is just as wrong to do so now. Why should not all small savers benefit in the same way and have the first £15 interest free of Income Tax? The aim of all hon. Members is to encourage people to save—all types of people—and it is an excellent exercise for us both to encourage savings and to save. I put it to the Chancellor and to the hon. Member for Wood Green: why should not the holders of War Loan, the most widely held securities in the country, have their first bit of interest free of Income Tax?

Mr. James Dempsey: If the hon. Member feels so strongly about it, why does he not table an Amendment or new Clause to that effect?

Sir C. Osborne: The hon. Member should not rush his fences. I am merely saying that the proposed new Clause does not go far enough to even touch the real problem because it will not encourage people to save. It is futile and inadequate to encourage savers in this way. It is far more important to protect the real value of their savings than merely to give a tax concession on the first £15 of interest. To illustrate this I urge hon. Members to recall that in October, 1946, the famous 2½ per cent. Dalton Treasury bonds were issued. The price was £100, but the price of them today is £45. People who took the advice of the then Labour Chancellor and put their money into those bonds today have only £45 for their £100 investment.

Mr. John Rankin: Another Tory achievement.

Sir C. Osborne: They have been swindled.

Mr. Dempsey: Tory inflation.

Sir C. Osborne: It is also important to realise that £1 at that time, in 1946, is today worth about 10s., so that £100 saved then is today worth only £22 10s. These people have been swindled out of £77 10s.

The Deputy-Chairman: I hope that the hon. Member will relate all this to the Clauses under discussion. I am a little uncertain at present of the connection.

Sir C. Osborne: The proposed new Clause to extend relief under the 1956 Act is asking that the first £15 of interest should be granted free of Income Tax—not Surtax—to the recipients on two new classes of savings. The purpose is to encourage people to save. I am trying to reason that this is futile unless, first, it selects the other groups of savers and, secondly, because it excludes far more people than it includes. It is, therefore, socially unjust to savings.
In any case, the proposed new Clause will not do what hon. Members on both sides of the Committee want to do—encourage people to save more. Fifteen pounds free of Income Tax will not cause people to save more if, at the same time, they see the real value of their savings being lost in inflation. The falsity of the proposed new Clause is that, on the one hand, on one occasion hon. Members urge my right hon. Friend the Chancellor to spend more—and to create inflation and thus to take away the value of the savings they want the people to provide—and that, on the other hand, they must know that people will not save if they see the value of their savings being whittled away.

Mr. James Callaghan: The hon. Member is assuming that there will be a continuation of Conservative government, and if that happens I quite agree that people will go on being swindled of their savings. But we are assuming that there will be a swift change to a Labour Government to restore the value of people's savings.

Sir C. Osborne: I am much obliged to the hon. Member for his intervention. If he will look at the figures between 1945 and 1951—

The Deputy-Chairman: Order. This is going much too far from the Clause. We cannot discuss inflation now. I hope that the hon. Member will come to the Clause.

Sir C. Osborne: I will obey your Ruling. Sir Robert.
I oppose this Clause because I do not think that it will achieve the object that

hon. Members opposite have in mind. To allow the first £15 of interest to be free of Income Tax, a concession which they wish to give to two sections but to deny to other sections, such as holders of War Loan and other Government stocks, would be socially unjust and would land us ultimately in inflation. This new Clause only plays with the problem. It is futile, and should be rejected.

Mr. W. T. Williams: The last time I spoke on a Clause similar to the New Clause—"Reduction of rate of Profits Tax on co-operative societies &c."—was in 1958, and since then I have listened to most of the speeches urging the Government to fulfil its purpose. Our approach tonight is rather that of the much-married American starlet who at the moment of her fourth marriage said that it was a triumph of hope over experience.
The hon. Member for Louth (Sir C. Osborne) will not expect me to agree with much that he has said, but I am at least happy for once to join him in paying tribute to the work and social significance of the Co-operative movement. It is this that makes me wonder why the Government persist in pursing a policy of imposing Profits Tax on this movement that has been characteristic of them through out their period of office. The hon. Member for Nottingham, South (Mr. W. Clark) congratulated the Conservative Party on being ever fresh in ideas, but in the Government's attitude towards the Co-ops it is true that the more Ministers there are the more things remain the same.
As long ago as 1933, the Raeburn Committee instituted what is illegal fiction with a vengeance—that the Co-ops were to be treated just as though they were joint stock companies. The Government ought to know better than to behave like that, because the Co-ops have absolutely nothing in common with joint stock companies. They are not joint stock companies, their capital structure is not the same, the way in which they distribute their profits is completely different, and the 13 million membership is made up of people who are, by and large, very different from the shareholders in the joint stock companies.
The Government are supposedly in favour of the Co-ops—they pay them the tribute of lip-service—yet they persist in


continuing this fiction that it is just and fair to treat them as though they were joint stock companies for the payment of Profits Tax. That is not only unjust and unfair—it does not even make sense.
For instance, the Co-ops, apart from having a fixed price for their shares—the shares are for ever at par and do not increase in value as, one hopes, the joint stock companies shares do—limit the amount of interest they pay and spend the greater part of their surpluses as dividends to their members. The people who benefit are those who purchase from the co-operative stores. In such circumstances, this legal fiction, is manifestly unjust.
The position is now rather worse than it was in 1958 when this profits taxation was first imposed on the Co-ops. They are not now being treated even in accordance with the original fiction, but worse than the joint stock companies, by the raising of the rate from 3 per cent. to 10 per cent. in 1958; from 10 per cent. to 12½ per cent. in 1960, and from 12½ per cent. to 15 per cent. in 1961. In the same period, the joint stock companies have benefited tremendously, because in 1958 the taxation on their profits was reduced from 30 per cent. to 10 per cent., and they will this year be paying half their pre-1958 rate while the Co-ops will pay five times as much.
That is manifestly unjust to the 13 million co-operators who comprise the backbone of our working people, for they are able to hold relatively little capital. The average amount of capital held by each co-operator is only £22 10s. 0d., yet it is these same people who give to the co-operative movement the enormous total capital in shares and loans of £294·7 million.
We have already heard that one-third of the total of Co-operative savings is invested in Government stocks. However, the effect of the 1958 Act upon the co-operative societies holding the capital of their co-operators has been that they have had to pay in the form of taxation on profits an additional £1–3 million, in 1960 a further £500,000, and in 1961 a further £450,000. That is an increase in taxation paid by the societies of about £2¼ million a year out of moneys which would otherwise be returned to their 13 million members, who are, in the main, people in the lower income groups.
The fall in dividend paid by the co-operative societies is related directly to this. The effect is so grossly disproportionate, demanding such a large contribution from lower-paid people and increasing the burden upon organisations which the Government constantly aver are for the social and economic benefit of the country, that we repeat our plea tonight, more in hope than in confidence, I fear, that they should revise their attitude and grant what we ask in the new Clause.

8.30 p.m.

Mr. Skeet: I do not wish to follow the remarks of the hon. Member for Warrington (Mr. W. T. Williams), although I concede that his argument is extremely persuasive. I wish to direct attention to the new Clause, to which, together with some of my hon. Friends, I put my name, to exempt building societies from Income Tax and Profits Tax.
No doubt, my hon. Friend the Economic Secretary has had an opportunity to read Cmnd. 2050, to which many references have already been made. It appears that he may be in a rather troublesome predicament here. If new housing societies are to be created which do not pay Income Tax or Profits Tax, it will be rather difficult not to concede this concession to the building societies. After all, the building societies have contributed enormous sums to the same purpose since the war, and if the money had not been forthcoming from them it would have had to be found by the local authorities or by the Government.
I shall make my point briefly, because I support what has been said by my hon. Friends and by some hon. Members opposite who have pressed this proposal on the Government. I suggest that my hon. Friend the Economic Secretary ought to make perfectly clear to the Committee precisely what future rôle he has in mind for the building societies. He has said that the building societies can play a greater part in the life of this country. What precisely is to be their rôle? Cannot that rôle be facilitated by exemption from income Tax and Profits Tax, which would involve only about £15 million?
Who will be the people to benefit? One cannot do better than refer to the Halifax Building Society, the largest in


the country. Last year, the Halifax advanced a total of £114 million on 60,000 mortgages. The breakdown of the total is interesting. There were 56,966 mortgage advances agreed which did not exceed £3,000 each, and these were all in respect of homes to be occupied by the borrower himself. The total there was £97 million. Again, of 3,180 mortgage advances between £3,000 and £3,500, all were in respect of homes to be occupied by individual persons, the total amount there being approximately £10 million.
Thus, we find that the people who would benefit would be those in the lower ranges of income, the very people we would wish to benefit, those requiring mortgages for the advance of about £3,000 or, perhaps, even £4,000. We are not asking for a concession to assist extremely wealthy people. The concession would assist young married couples, often the people who advance money to the building societies, who want homes which they can have as their own so that they will not be paying rent in perpetuity but, rather, over the course of the term of, say, twenty or thirty years, will have an investment.
We do not wish to return to the era of Socialist inflation. We hope to be able to say ultimately (that every man in the United Kingdom will have a house of his own, if he so wishes. We already know that each year 125,000 people are buying their own houses with the assistance of building societies. The purpose of the new Clause to which I am speaking is well understood, and I hope that my hon. Friend the Economic Secretary appreciates that he may be in some difficulty here.
There are various forms of saving. There is saving through the building societies, the National Savings movement, the housing associations, and so on. There are all these common avenues by which money is saved by the community. Are some of them to be subjected to Profits Tax and Income Tax and others not?

Mr. Laurence Pavitt: As the hon. Gentleman is developing this theme of the vast number of people who will own their own houses, may I point out that in his constituency the borough council had to stop lending money for a long period to would-be owner-1963

occupiers because of the high interest rate which arises from the Government's policy, whereas when I was on a local authority under a Labour Government we were lending money under the Small Dwellings Acquisition Act at the rate of 2¾ per cent.? Surely that is inconsistent with the hon. Gentleman's argument.

Mr. Skeet: That Act was not put on the Statute Book by a Socialist Government. I believe that the Small Tenant Acquisition Acts were introduced in 1889 and 1923, but they were not put on the Statute Book by a Labour Government. If the hon. Gentleman likes to discuss the question of interest rates, he must take a number of factors into account. The Government cannot manufacture money by a printing machine. They can only derive it from the taxpayer and from people who are prepared to advance it. Thirty-eight per cent. at least of the contributors are the public themselves, and unless they are paid a reasonable rate they will not provide the money.
Reference was made a moment or two ago to War Loan. I do not want to get out of order on this matter, but I have been asked a question on it. Hugh Dalton, as he then was, advised people to put down £100 for War Loan. It has reduced in value until today it is worth only £45. Members of the public appreciate that 2½ per cent. is not enough and feel that they are entitled to a little more. In considering the question of interest rates, we must bear in mind not merely internal, but also external matters which affect our balance of payments.
The Halifax Building Society paid £8,922,283 in Income Tax last year, but I appreciate that a large part of it would be paid on account of the investors themselves and that only part of it would be on the residual surplus. The Society paid £813,000 in Profits Tax, a quite significant figure. I appreciate that if only the Profits Tax argument were conceded the building societies could not do very much because the ratio of their reserves to assets has gone down from 6·4 to 4·4 per cent. and it would be necessary to build this up.
Who would benefit from this suggestion? The chief general manager


of the Halifax Building Society has written me a letter—

Mr. Rankin: Is the hon. Gentleman a director?

Mr. Skeet: I have nothing to do with the Society. The chief general manager states:
In present conditions, assuming an immediate exemption from profits tax and income tax on surpluses, it would certainly be the wish of the Halifax Board that the benefit arising from the consequent adjustment in margin should be passed to the borrowers by way of an actual reduction in the rate of interest they are charged at present, which is 6 per cent. I cannot foresee the precise extent of such reduction except to say that it would he at least I per cent.
This is an authoritative statement. This would be the benefit which would go to the people in a property-owning democracy which, we hope, will extend.
Many arguments have been adduced on this matter, but I think that the only argument which the Government can put against it is that it would create a number of anomalies. It might be said that, if the Government conceded this in respect of building societies, they would have to concede it in respect of co-operative societies, and so on. But there is one prime necessity, and that is to build more and more houses throughout the country, which the Government are doing under the proposals of the recent White Paper. What the people want, above all, is more houses which they will own over the course of years.
We appreciate that it is necessary to build more council houses, but the advantage of this from the building societies' point of view is that a man will have his own house through his own earnings over a number of years. This is one way in which the Government could substantially aid the borrower.

Mr. Rankin: I am committed to only five minutes and that is a disaster which the hon. Member for Willesden, East (Mr. Skeet) did not minimise by exceeding five minutes. I am thinking of my hon. Friends on this side who would like to say a word or two. Before I came into the Committee tonight, I read the speech which I made on this subject last year and I enjoyed it very much. I consider it to be a very good speech. It occurred

to me that if I had time, I would bring it in and read it again tonight, but, unfortunately, it occupied more than five minutes, and I have been reminded by my Front Bench that I sometimes forget when I have had my five minutes.
I am glad to see the Economic Secretary on the Front Bench, because he was not occupying that position when I spoke a year ago and had a great deal of support from him. He was most friendly in his disposition towards us when he was on the back benches, sitting next to his hon. Friend the Member for Crosby (Mr. Graham Page), who evidently remembers the occasion. A year ago, we bad much encouragement from hon. Members opposite. They were all in favour of saving. When it came to the vote, however, they went into the Lobby against us. The Economic Secretary has the chance tonight to redeem himself.
I wish particularly to address my remarks to the new Clause entitled "Reduction of rate of profits tax on co-operative societies, & c.". I should like the Economic Secretary to remember what he said a year ago about savers and to tell us that tonight, instead of running away, he will stand with us. I asked him to do that last year, but he did not.
There is one little problem in this long fight that has been with us since 1958 when we abandoned the 3 per cent. tax. Why is it that these profits, created by the same people in the same way and in the same movement, the Co-operative movement, were regarded as undisturbed profits from long before the publication of the Reyburn Report in 1933—and the Labour Government throughout its term of office regarded and treated them as such—but that in 1958 they suddenly, overnight, became distributed profits treated in exactly the same way as if the Co-operative movement were a joint stock company? That was altogether wrong.
I am certain that when he replies, the Economic Secretary will not try to prove what is unprovable. Perhaps, however, he will tell us why what was regarded as the right thing to do prior to 1958 suddenly became the completely wrong thing to do after 1958, with the result that the movement is today losing £2¼ million, practically all of which comes from working people.
Last year, the Economic Secretary said that he wanted to see savings made out of income. I want to ask him again, as I asked him last year: what is the difference? He wanted to save out of husbands' incomes. We want to save out of the housewives' spending. We were prepared to assist him in his effort last year, will he come to assist us in our effort this year; to encourage the savings which women make when they spend money in a co-operative society?
8.45 p.m.
My five minutes are up, much to my regret. [HON. MEMBERS: "Go on."] I should become very unpopular with those on this side of the Committee if I did. My hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) cannot sit any longer in his seat, and I hope, Sir William, that you will note what I am saying. However, I am grateful to have had five minutes; and I hope that the hon. Gentleman who supported me on this topic once before but not by vote will be helpful on this occasion and correct that error and support our new Clause.

Mr. Graham Page: I want to return to the new Clauses which deal with building societies and particularly to those which seek to give relief not only from Profits Tax but for Income Tax as well—although I think that hon. Members have taken too slavishly the statement of the Building Societies Association that relief from Profits Tax could not be reflected in any reduction in interest charged to borrowers. Certainly, so far as the smaller societies are concerned, which have a variety of ways of advancing at varying interest, relative to the properties on which they advance, I believe that even relief from Profits Tax could be reflected in benefits to the borrowers, perhaps on the older properties on which some of the smaller societies charge slightly more interest.
I have to declare an interest at once. I am a director of a building society. I find that the public idea of the board of a building society is rather extraordinary. We are thought of as whimsically or devilishly turning the screw to get another¼ per cent. interest out of the borrower and delightedly putting it into the board's pockets. Of course, what the board of directors of a building society are concerned with is that margin be-

tween the rate of interest which they have to pay to get the money in and the rate of interest which they have to charge the borrower.
In dealing with the margin they are dealing in shillings and pence. It is not a large margin. Into that margin have to be squeezed the administrative expenses, the reserves which building societies have to maintain, and tax; and the tax takes a very big slice of that margin. If there were tax relief that margin could be cut; not could be, but would be cut, because it would be an obligation on the building societies to cut that margin.
It depends which end one is going to cut it. Is the interest which is paid to the depositors in order to attract more money into the building societies to be increased, or can the rate of interest charged to the borrowers be reduced? Until recently I would have said that the necessity would have been to give more interest to depositors in order to attract more money in, but from the beginning of this year or the end of last year the money has been coming into the building societies freely at the rate of interest which is offered.
This is a situation which makes it possible, if the Government would give relief now, to pass that relief on to the borrowers. It is a situation which has not existed until this year in all the debates we have had on this subject from 1958 onwards. The trouble from 1958 onwards for the building societies has been to get the money in. Therefore, any relief which they might have been given on taxation might have been passed on to those lending money to the societies, in order to attract the money in, rather than to relieve borrowers.
Now the situation has changed. The money is flowing in at the rate of interest offered, and therefore even if building societies were relieved of Profits Tax this could be passed on to the borrowers as a definnte benefit. This, then, is just the moment this year to give that relief, a moment which has not occurred in all the past years.
There is a further reason for giving the relief this year, or at least forecasting that it will be given next year, and that is the White Paper to which hon. Mem-


bers have referred and which blandly says
…the Government have decided to encourage an expansion of the housing society movement. The building societies can play a major part in this new development.
The part which they are to be asked to play is to advance two-thirds of the money required by the housing societies in this expanded programme and to advance it for periods of forty years.
This will make it more and more difficult for the directors of building societies to adjust that margin. They are to be asked to try to spread their investments over forty years, with less and less coming in to lend out again, and having their investments tied up for that period. This is a serious thing to ask the societies to do in order to enable the Government to carry out their expanding programme. This ought to be recognised by the Government and relief should be given in return for it.
It has become the practice over the last one or two years for Chancellors of the Exchequer to forecast what they will do in the next Budget. We had, for example, the forecast about Schedule A. What is stated in this White Paper on Housing cannot come into operation for at least twelve months. It needs legislation and the whole scheme has to be worked out, but it does need the assistance of the building societies. The White Paper actually says so. It needs their assistance to the extent of two-thirds of the money which is required for this expanded programme. If my right hon. Friend could say this year that to carry out that expanded programme the next Budget will include relief to building societies we should be very happy. I think that this should be done. I think that it must be done.

Mr. Chapman: This debate has been repeated so often in previous years and the case for the building societies has been made so frequently and clearly that I shall not restate it again tonight. The tendency in the Committee has been simply to state the broad case all over again. Obviously, I am in sympathy with that, for I have made it myself in every previous debate on this subject, but I thought that it would be as well if I tried not to restate that broad case but to examine the response hitherto made by the Government.
I want briefly to look at what I think was the most important debate which we have had on this subject, which was in June, 1961, when the present Financial Secretary replied on behalf of the Government to this broad case. The case is clear enough. It is the difference between building societies and joint stock companies, the absence of distribution of profits, the special nature of building societies as small savings institutions and the broad social argument on housing grounds. I should like, therefore, to refer to the answer which was given by the hon. Gentleman on that occasion. What the hon. Gentleman said gave us half our case. He said:
It is perfectly true that there is no equity interest in their capital, that any surplus which is put to reserves does not enure for the benefit of their shareholders, who are entitled only to a fixed rate of interest, and that that serves to build up the business for the benefit of would-be house owners.
All that is true. So he thus gave us a very important part of our case. It is, therefore, a waste of time to keep on making that case for it has been accepted by the Government. The hon. Gentleman went on:
As to the surplus or the profit, the amount which the societies put to reserve after deducting all the outgoings by way of expenses and interest is a true profit and recognised as such by the Royal Commission. It is difficult in those circumstances to see why it should escape tax in the case of the building societies on any grounds of principle and logic, certainly as compared with an ordinary company.
The hon. Gentleman stands by that.

Mr. Eric Lubbock: The big difference surely is that these profits cannot be distributed.

Mr. Chapman: I am pointing out that the hon. Gentleman the present Financial Secretary stands by that feature of his case. Even if the profits are not distributed, according to him they are profits. He said that this was something which must be considered as a profit and taxed as such.

Mr. Barber: indicated assent.

Mr. Chapman: The hon. Gentleman nods his head. He stands now where he stood in 1961 on this matter. But does he not see the flaw in that case? If we are looking for a particular reason to foster an organisation on social grounds, we can see it in the tremendous difference


between a joint stock company which distributes its profits and an organisation whose surplus the hon. Gentleman calls a profit because he wants to and for no other reason. This gives us the loophole to say that this difference between building societies and other organisations enables us to disregard his purely academic definition of profits so that we can pursue a particular social purpose and thus relieve them from this taxation. In the last resort, the hon. Gentleman is hanging on to a very slim academic argument which has little to do with reality. Indeed, he admitted it.
The second leg of his argument was that if the Government relieved building societies from this form of taxation it would be
…virtually impossible to withhold a similar concession from other bodies which have no equity share capital and are not profit-making according to the definition of profit-making which has been assumed by certain hon. Members in the debate."—[OFFICIAL REPORT, 14th June, 1961; Vol. 642, c. 498–9.]
In other words, if he did this for building societies he would have to do it for the Post Office, the nationalised industries and public utilities. This may be so. Indeed, I would support that case. But it can be supported and argued on quite different grounds.
The relief of nationalised industries from taxation is mainly a matter of national accounting, book-keeping and administrative tidiness. Therefore, that argument is quite different from the one about building societies. The argument about building societies is that we are trying to foster a small savings institution which is, so to speak, half nationalised—I mean in the sense that it is a social institution. We can, therefore, approach the problem from that angle. Thus, the second leg of the hon. Gentleman's argument does not really stand up. The arguments can be judged on entirely different grounds.
9.0 p.m.
I rose tonight only because I have become tired of these debates year after year during which we make the broad case but receive no answers. I challenge the Financial Secretary. For heaven's sake, let him not rely on these two arguments for the fifth or sixth year in succession. They are alt we have had every year. I ask him to stop it. Let us have

a real answer to our case, which is that there is sufficient difference on every ground between building societies and other institutions to merit a special concession. I hope that we shall get a little further tonight.
Even hon. Members opposite have not progressed very far. The hon. Members for Nottingham, South (Mr. W. Clark), Crosby (Mr. Graham Page) and Coventry. South (Mr. Hocking) said tonight—"If not this year, could we at least have a promise for next year?" They keep on saying this. In 1961 the hon. Member for Nottingham, South ended his speech with these words:
I hope that my hon. Friend will give some hope, if not for this year then for the future, because building societies should get relief."— [OFFICIAL REPORT, 14th June, 1961; Vol. 642, c. 492.]
I could detect the tremor in his voice. We have had the same thing all over again tonight. /t is up to hon. Members opposite. A tough lobby on Schedule A managed to secure some progress. While there is a Conservative majority in the Committee, we must depend to some extent on some hon. Members opposite being a little tougher each year. It is no good now making the same speeches as were made in 1961. They will get the same "brush-off" from the Front Bench as they received then. It is time hon. Members opposite were tougher with their own Front Bench, if they really mean what they say each year on this issue. I look to them tonight to be a little stronger when it comes to the final decision. We have had enough of their words. Let us have a little action from them.

Mr. Dempsey: Like my hon. Friend the Member for Glasgow, Govan (Mr. Rankin), I must keep an eye on the clock and an eye on the few notes I have. This is the second evening in succession when time has been my greatest adversary. Although I find it most unpalatable, I have come to a gentlemen's agreement and, being a gentleman, I intend to observe it.
I have a co-operative society in my constituency known as the Coatbridge Co-operative Society. It is a fairly large society. Its board of directors has already made strong representations to the Financial Secretary about the discrimination against co-operators small


savings. It feels very strongly that it is unfair to penalise co-operative savers when there is no discrimination against Post Office savers. The Clause seeks to ensure that co-operative small savers should enjoy the same privileges as Post Office and trustee savings bank savers. No doubt there are millions of persons who have made investments with the Post Office and who are enjoying this advantage, but there are also millions of co-operators who have done likewise through co-operative societies. Why should these small savers who are contributing to the nation's well-being be penalised?
Earlier we listened to some clap-trap about a property owning democracy. The 13 million co-operators democratically own, manage and control their own businesses. They elect officials. After meeting trading expenses, they share the surplus according to member's purchases. This section of the community is worthy of every consideration and encouragement from the Government. We ask that these small savers should have the same advantages as those who invest in the Post Office or in trustee savings banks.
I was recently asked to address the managers of this society. They were angry at what they called the shameful treatment of the co-operators in this country. All that we are asking is that the Government should grant them a relief of £2 million. This should be no trouble to hon. Gentlemen across the way. I am sure that there was more lost on a certain race which took place earlier this afternoon. I think that this is the reason for the Bill being discussed at this late hour and for hon. Members like myself being restricted to two or three minutes in which to make a speech.
This Amendment has been discussed year after year in our consideration of Finance Bills, and speaker after speaker on this side of the committee has pleaded the cause of this movement. I am assured by members of the Co-operative movement in my part of the country that had this tax never been imposed the money which would have been saved by the co-operative societies, especially those in the development districts, would have enabled them to modernise their property to a far greater extent than they

have been able to do. By modernising their shops they could have provided a considerable amount of work for building trade operatives and at the same time helped the expansion of the national economy. During the period when this tax has been in operation the Inland Revenue authorities have captured from small savers sums which could have been better directed to the development of consumer organisations and indeed producer organisations in the Co-operative movement of this country.
All that the new Clause asks for is fair play for the co-operators by treating them in the same way as those who invest in the Post Office and trustee savings banks are treated. The amount involved is infinitesimal, and I would therefore have expected a sympathetic response from hon. Gentlemen opposite to this request. I hope that the Minister will consider the representations which have been made and not try to convince us that to concede this amount would cause inflation. Time and again it has been said that this concession will cause inflation, but it will amount to a concession of £2 million out of the many thousands of millions in the national budget.
I have never listened to as much piffle as I have heard from the other side of the Committee tonight. I ask the Minister to be realistic and fair-minded and for once to be sympathetic to the Cooperative movement, which has done so much for the country and for the people it serves so loyally.

The Economic Secretary to the Treasury (Mr. Edward du Cann): We have been discussing five separate propositions which have certain common threads running through them. There is the proposition to extend relief under Section 9 of the Finance Act, 1956, to give co-operative and friendly societies the same privilege enjoyed by the ordinary departments of trustee savings banks and the Post Office savings bank, by which the first £15 would be free of Income Tax although not of Surtax. We have been discussing a new Clause suggesting that co-operative societies should be put in a favourable position as to liability to Profits Tax by going back to 1958. In the final group of new Clauses the suggestion is made that we should exempt building societies from Profits Tax or Income Tax and Profits


Tax together to a greater or lesser extent. There is a slight difference between the suggestions made by the Liberal Party and by my hon. Friends.
The hon. Member for Sowerby (Mr. Houghton), the hone Members for Glasgow, Govan (Mr. Rankin), Coatbridge and Airdrie (Mr. Dempsey), Birmingham, Northfield (Mr. Chapman) and others have referred to debates we have had on these matters throughout the years. It might be thought perhaps that the Committee would be suffering ennui as a result, because we have heard the same points made before and have had the same speeches.

Mr. Rankin: Mine was not the same.

Mr. du Cann: The hon. Member's may have been shorter, but I think it was the same in substance. We have had some excellent speeches tonight. I wish to mention in particular the speech of the hon. Lady for Wood Green (Mrs. Butler), which impressed me as it did the whole Committee.
I was very pleased that no one made the point, as I thought they perhaps might, that there was some sort of prejudice against co-operative societies. That is a point which is sometimes made outside this Committee. The hon. Lady and the hon. Member for Workington (Mr. Peart) and my hon. Friend the Member for Louth (Sir C. Osborne) went to some trouble to say extremely pleasant things about the Government and their attitude towards co-operative and friendly societies. I am sure that is appropriate. A great deal was said tonight about the splendid work they do. I believe the hon. Member for Sowerby used the word "admirable". I wish to endorse all these tributes paid to that splendid movement.
The hon. Member for Govan seemed to put his finger on the point perhaps to a larger extent in one observation he made. He suggested by inference, and he was probably quite right, that I might find myself in some personal difficulty for, as the Committee well knows, I am enormously prejudiced in favour of savings, because savings do so much for the individual and the habit of thrift is a fine thing to encourage. It brings out the best qualities, as the whole Committee will agree. On the other hand, and here is the conflict, I am sensible of the need

for sound, wise and fair administration. There is a conflict here.

Mr. Rankin: The hon. Gentleman is now saying that we agree, he and I, on the need for savings. I ask him this year what I asked him last year, not to penalise savings in the Co-operative movement.

Mr. du Cann: With great respect to the hon. Member, I think his memory is slightly at fault. I have never knowingly penalised anyone either in the past or at present, as I shall describe. His intervention reminds me—and I hope to illustrate the point in my remarks—of the difference between an optimist and a pessimist. I once heard an optimist described as the man who said a bottle was half full while a pessimist said that it was half empty. We have had the same difficulties during the course of this discussion. We are talking about an exact, precise and definable situation which some say is unfair, some say is discrimination and in which some say there are decided advantages. We shall see and come to a decision in due course. What we have basically to decide is whether co-operative societies, friendly societies and building societies should be placed in a somewhat special position.
On the subject of the first of the new Clauses we are considering, which was especially referred to by the hon. Members for Wood Green, Coatbridge and Airdrie, Sowerby and others, the hon. Member for Sowerby was entirely right when he said that when the concession to the trustee savings banks ordinary departments and the Post Office savings bank accounts was introduced by the Prime Minister when he was Chancellor, in 1956, two clear conditions were laid down. I wish to rehearse them clearly to the Committee. The object was to give special encouragement to those savings institutions which invest the whole of the funds deposited with them with the State and which pay a relatively low rate of interest. They are the only two savings institutions in the United Kingdom which fulfil those conditions.
Some hon. Members discussing this point this evening have suggested that our attitude is inflexible. That is not so. I wish to remind the Committee of what happened in the case of the Birmingham Municipal Bank, which is now under this


general umbrella. I dare say—it is a matter that we shall have to decide in time—that other institutions could come under the same umbrella if they fitted the precise conditions, but at the moment they do not. I do not deny that they do immensely good work, but they do not fit these two conditions.
9.15 p.m.
Secondly, it is true, as has been argued, that giving the concession to co-operative societies and friendly societies would cost only about £2½ million, which is not a very great cost. On the other hand, if we departed from those conditions and devised conditions which would fit these two types of society, inevitably the demand would arise from many other forms of savings institutions. It is not only cooperative societies and friendly societies which encourage the small saver. There are many other institutions which do, and will do, exactly the same thing. The list is very long indeed, and the fact is that the total cost would be about £40 million. The point is that here are conditions. They are entirely clear. These two institutions have this favoured position, and they meet these conditions. The other institutions do not.
The hon. Member for Sowerby asked a question about National Savings Certificates. I will not follow him into a lengthy intervention on that point—you would not wish it, Sir William—but I was asked particularly what was the Government's attitude towards small savings. I confirm that it is our clear opinion that small savings are vital from every point of view vital for the national economy and for the kind of social reasons which I briefly discussed earlier. It is true that the inevitable hold-up in the issue of new Savings Certificates has been an inconvenience to the savings movement in general, although all other forms of National Savings have been open. It is pleasant and gratifying to read of the spendid result which the new issue has deservedly had on its introduction.
I turn to the new Clause dealing with co-operative societies. The hon. Member for Sowerby mentioned the Report of the Royal Commission on Taxation, and I will quote from paragraph 562 of the Final Report:

The main principle that we wish to see adopted is that a tax on the profits of corporations should apply to all profits without distinction…It seems to us that only by an impartial distribution of the tax whenever and wherever profits are found can there be a fair balancing of costs and prices…
Those words are extraordinarily clear. The hon. Member for West Ham, North (Mr. A. Lewis) comments that I read this better last year. He is very good at interrupting while remaining seated. I did not speak on this subject last year.

Mr. Arthur Lewis: I said that it was read better last year from the Front Bench.

Mr. du Cann: I do not think that I need follow the matter further. I have made my point, and I think that the Committee accepts it. These words of the Royal Commission are entirely clear. I am not one of those who believe that the words of the Royal Commission are Holy Writ. On the other hand, as I shall argue tomorrow, if we reach the subject which I hope to discuss tomorrow, these words have to be taken with very great seriousness and to be given proper weight. They are clear and definite and they bear particularly on four of the new Clauses.

Mr. Houghton: The hon. Member no doubt recalls what the Royal Commission said about Schedule A.

Mr. du Cann: Indeed, and I remember the hon. Member making that point with his usual distinction and clarity. I will not mention the exact words which he invited me to use about his speech earlier, because I do not want him to read too much into them. I have said that I do not regard the words of the Royal Commission as Holy Writ, but it is appropriate to argue that we should pay strict attention to them, as the hon. Member himself argued, and take them seriously.
The hon. Member for Sowerby pointed out quite fairly, although other hon. Members have failed to point it out, that in relation to their share dividends Cooperative societies are somewhat specially treated. So they should be, I believe, and so the Committee feels, for share dividend is certainly different in kind from the dividends paid by ordinary companies. This position is made clear by Section 26(2) of the Finance Act, 1958. Some hon. Members argued as though we treated co-operative societies exactly on


a par with joint stock companies. This is certainly not so.
On the other hand, if we accepted the new Clause in the name of the hon. and learned Member for Kettering (Mr. Mitchison), not only should we be in breach of the Royal Commission's recommendation, but I sincerely suggest to the Committee that we should be creating a thoroughly unfair situation as against other traders of all kinds in the national economy.
It was argued by some hon. Members that because Profits Tax had increased over a period, we had somehow done something which was particularly and peculiarly unfair to co-operative societies. That simply is not so. If taxation in general rises, it must be appropriate that all traders should bear it equally; anything else would be inequitable.

Mr. Holman: How can the hon. Gentleman maintain that the Profits Tax should apply to non-profit-making organisations which merely have to accumulate a small reserve, such as a building society or co-operative society, in order to maintain their solvency under difficult conditions?

Mr. du Cann: I suggest that it should apply simply because these societies are engaged in trade in the same way as limited liability companies are engaged in trade.
I now advert to the larger group of Amendments dealing with building societies. I shall not follow the hon. Member for Huddersfield, West (Mr. Wade) into the details of the long-standing arrangements which have existed in relation to the composition of tax and the rest of it. I think we are all agreed that this is the appropriate and sensible thing to do, and, as he quite rightly suggested, it saves everybody a great deal of trouble; and that surely is a thoroughly good thing.
I want to come to the argument used in favour of giving building societies an especially favoured position. Something was said to the effect that building societies were non-profit-making concerns. A great deal on this point was again said by refe-ence to debates that we have had in earlier years. The hon. Member for Northfield with HANSARD in his hand —a very bulky volume from the look of it—quoted at some length from the

debate of 1961. Many other hon. Members have quoted from our earlier debates. But what I did observe, somewhat to my disappointment, because I know that hon. Gentlemen are honourable men, was that these quotations were very selective. No one quoted, for example, the speech of my hon. Friend the Member for Wimbledon (Sir C. Black) last year. No one in this Committee has more experience of building society matters than the hon. Member for Wimbledon. This is a matter of fact, not a matter of argument. He made the point very clearly that a building society is a profit-earning society in the same way as any limited liability company attempts to be. There were other hon. Gentlemen who suggested, rather as has been suggested in relation to co-operative societies, that there were no particular tax concessions for building societies. This is again simply not true.
In the case of Profits Tax, with which we are concerned particularly in relation to the Opposition Amendment, the difference between their shareholders and those of an ordinary limited liability company is already recognised in arriving at their Profits Tax liabilty.

Mr. Chapman: indicated assent.

Mr. du Cann: I am obliged to the hon. Member for Northfield for confirming that. Therefore, they do in fact have special treatment under our tax system at the present time. But their surplus is undoubtedly and unquestionably a profit in the ordinary sense of that term. Of that there is no doubt whatsoever. There can be no escape from the logic of the Royal Commission's view, because if we get away from that clear principle and start modifying the rate of tax according to the nature of the trade or business which is carried on, or the nature of the body which carries it on, as Lord Amory said a year or two earlier, we shall certainly be in a very deep bog indeed. Where would the exception of these particular societies lead us? That is a question that no Member of the Committee is willing to attempt to answer.
Nobody in the Committee produced one of the arguments which has been made many times in the past, to the effect that the incidence of tax prevents building societies from building up adequate reserves. I am not surprised,


for it is an argument which it is impossible to justify, although we hear it outside the Committee from time to time.
We are told, and we were told, that there are special social reasons why building societies should be helped. It was said, in particular by my hon. Friend the Member for Nottingham, South (Mr. W. Clark), my hon. Friend the Member for Willesden, East (Mr. Skeet) and my hon. Friend the Member for Crosby (Mr. Graham Page), who also has great experience of these matters, that the exemption proposed in the Clause which those hon. Members recommend would allow for a reduction in the mortgage interest rate charged by societies of about ¼ per cent.
I accept the argument that it is essential to do all that we can in various ways, so far as it is open to us, to facilitate home ownership. I have never had any doubt about that in the whole of my life. Of course that is true. But, of course, it is similarly true that many factors go to make up the cost, so to speak, to home owners. Everyone in the Committee knows this. It is certainly true that interest rates are one of them, but what would a difference of per cent. mean to the kind of people, talked about with such eloquence by my hon. Friends, when they come to attempt to buy their own houses?
I have had a calculation made and I report it to the Committee. When the rate of interest on mortgages was reduced from 6½ per cent. to 6 per cent., the Building Societies' Gazette reported that this would mean on a mortgage over a 20-year term that the monthly repayments would be reduced by 7d. per £100 borrowed. This calculation did not take into account the Income Tax allowance and perhaps the reduction would be a bit less than that, but we will forget that for the moment. A reduction of ¼ per cent., which might or might not follow from this change—some building societies might make a full reduction, but I am perfectly certain that not all would do so—and taking into account the total reduction of Income Tax and Profits Tax on surplus, would leave a monthly benefit of little more than 2d. per £100 borrowed to the standard rate taxpayer. For example, on a loan of £2,000 repayable

over 20 years, the net monthly repayments would be reduced by 3s. 8d. for the standard rate taxpayer. I am not suggesting that that is nothing. What I am saying is that one must get these matters into proportion and that this is a very small item.

Mr. Lubbock: The hon. Gentleman said that he was not sure whether the calculation based on the½ per cent. reduction was accurate. Is he aware that it was given in the Financial Times on 10th February, 1962, when the calculation showed that it would save the borrower £100 on a mortgage loan of £2,500 over a 20-year period?

Mr. du Cann: I dare say that there may not be any difference between the figures I have quoted and those which the hon. Member for Orpington (Mr. Lubbock) has quoted. What I am saying is that, in general, on the basis of regular payments this reduction would make very little difference.
Even if it made a very much larger difference, this is the year in which, as the hon. Member for Sowerby has reminded us, my right hon. Friend the Chancellor of the Exchequer has abolished Schedule A liability. This is the year when yet again this Administration has reduced the Stamp Duty on the purchase of houses. These concessions were extremely expensive—they were right and appropriate and proper concessions—and it is not altogether unreasonable to point that out to those who have pressed hardest to suggest that we should go still further during the course of this year.
We have continually done much to encourage home ownership and it is only right that we should be proud of that. We look forward to going further in the future, but, for the time being, there certainly seems to be no appropriate reason for giving a very high priority indeed, for social reasons only, to this suggestion in relation to building societies.
9.30 p.m.
I would like briefly to refer to the proposed new Clause in the names of my hon. Friends. That differs in cost not at all from the Clause proposed by the Liberal Party. Both parts of the profit or surplus—and I can see the reasoning, which is logical, of my hon.


Friends—arise from the lending of money at interest and I do not think that they should be dealt with differently for that special reason.

Mr. Wade: What is the significance in the statement that has been made on one or two occasions by Government spokesmen to the effect that there will be no Profits Tax or Income Tax on housing associations? What is the difference between that, if there is an operating surplus by a housing association, and a building society?

Mr. du Cann: I think that the point the hon. Member is endeavouring to press upon me is that the announcements made in the White Paper, which have to be followed by legislation, possibly constitute a precedent in the kind of Clause which he and the Liberal Party are advancing. I do not believe that to be so because the two things are different. One is an entirely co-operative venture and the other a building society of the orthodox kind, and to that extent an entirely commercial venture. The two things are entirely different and separate.
My hon. Friend the Member for Willesden, East asked what was the attitude of the Government towards building societies; what was our idea of the rôle they should fulfil in the future. I do not altogether accept the remarks of

my hon. Friend the Member for Crosby on this point. The building societies have played a very valuable part in our economy in the past. There can be no doubt about that. We believe that they will continue to play a great part in the future; that they will help the country and many individuals. We have enormous faith in them, as we have demonstrated, I hope, by the reference to them in the White Paper.

However, anyone who looks at their record of results I will not retail them all to the Committee, except to point out that their assets have risen from £1,256 million in 1950 to £3,437 million in 1961—will see how well they are doing. The argument that they or their social activities are adversely affected by the taxes which they currently have to bear, as does every other enterprise in the United Kingdom, quite frankly ignores the facts.

For those reasons, which I believe to be logical and good, I hope that the Committee will not see fit to press these new Clauses too hard.

Question put, That the Clause be read a Second time: —

The Committee divided: Ayes 151. Noes 216.

Division No. 129.]
AYES
[9.34 p.m.


Ainsley, William
Dempsey, James
Hughes, Hector (Aberdeen, N.)


Albu, Austen
Diamond, John
Hunter, A. E.


Allen, Scholefield (Grewe)
Dodds, Norman
Hynd, H. (Accrington)


Awbery, Stan (Bristol, Central)
Donnelly, Desmond
Hynd, John (Allercliffe)


Beaney, Alan
Edwards, Rt. Hon. Ness (Caerphilly)
Irvine, A. J. (Edge Hill)


Bellenger, Rt. Hon. F. J.
Edwards, Robert (Bilston)
Irving, Sydney (Dartford)


Bennett, J. (Glasgow, Bridgeton)
Edwards, Walter (Stepney)
Janner, Sir Barnett


Benson, Sir George
Fernyhough, E.
Jay, Rt. Hon. Douglas


Blackburn, F.
Finch, Harold
Jenkins, Roy (Stechford)


Blyton, William
Fitch, Alan
Jones, Dan (Burnley)


Bowden, Rt. Hon. H.W. (Leics, S. W.)
Foot, Dingle (Ipswich)
Jones, J. Idwal (Wrexham)


Bowles, Frank
Forman, J. C.
Jones, T. W. (Merioneth)


Boyden, James
Fraser, Thomas (Hamilton)
Kelley, Richard


Braddock, Mrs. E. M.
Galpern, Sir Myer
Kenyon, Cllifford


Bray, Dr. Jeremy
George, LadyMeganLlyod(Crmrthn)
Lawson, George


Broughton, Dr. A. D. D.
Ginsburg, David
Ledger, Ron


Bulter, Mrs. Joyce (Wood Green)
Gourlay, Harry
Lee, Frederick (Newton)


Callaghan, James
Grey, Charles
Lever, L. M. (Ardwick)


Carmichael, Neil
Griffiths, Rt. Hon. James (Llanelly)
Lewis, Arthur (West Ham, N.)


Chapman, Donald
Griffiths, W. (Exchange)
Lubbock, Eric


Collick, Percy
Hale, Leslie (Oldham, W.)
Mabon, Dr. J. Dickson


Craddock, George (Bradford, S.)
Hamilton, William (West Fife)
McBride, Neil


Cronin, John
Hannon, William
MacDermot, Niall


Crosland, Anthony
Harper, Joseph
Mclnnes, James


Crossman, R. H. S.
Hart, Mrs. Judith
McKay, John (Waltsend)


Cuilen, Mrs, Alics
Hill, J. (Midlothian)
Mallalieu, E. L. (Brigg)


Dalyell, Tam
Hilton, A. V.
Mallalieu, J. P. W. (Huddersfield, E.)


Davies, G. Elfed (Rhondda, E.)
Holman, Percy
Mapp, Charles


Davies, Harold (Leek)
Houghton, Douglas
Marsh, Richard


Davies, Ifor (Gower)
Howell, Denis (Small Heath)
Mason, Roy


Davies, S. O. (Merthyr)
Hoy, James H.
Mendelson, J. J.


Delargy, Hugh
Hughes, Cledwyn (Anglesey)
Millan, Bruce




Milne, Edward
Roberts, Albert (Normanton)
Thomas, Iorwerth (Rhondda, W.)


Mitchison, G. R.
Robertson, John (Paisley)
Thompson, Dr. Alan (Dunfermline)


Monslow, Walter
Robinson, Kenneth (St. Pancras, N.)
Thornton, Ernest


Oliver, G. H.
Rogers, G. H. R. (Kensington, N.)
Tomney, Frank


O'Malley, B. K.
Ross, William
Wade, Donald


Oram, A. E.
Silverman, Julius (Aston)
Wainwright, Edwin


Oswald, Thomas
Silverman, Sydney (Nelson)
Warbey, William


Padley, W. E.
Skeffington, Arthur
Watkins, Tudor


Paget, R. T.
Slater, Mrs. Harriet (Stoke, N.)
Willey, Frederick


Pannell, Charles (Leeds, W.)
Slater, Joseph (Sedgefield)
Williams, D. J. (Neath)


Parkin, B. T.
Small, William
Williams, LI. (Abertillery)


Pavitt, Laurence
Sorensen, R. W.
Williams, W. R. (Openshaw)


Pearson, Arthur (Pontypridd)
Soskice, Rt. Hon. Sir Frank
Williams, W. T. (Warrington)


Pentland, Norman
Spriggs, Leslie
Willis, E. G. (Edinburgh, E.)


Prentice, R. E.
Steele, Thomas
Winterbottom, R. E.


Price, J. T. (Westhoughton)
Stones, William
Yates, Victor (Ladywood)


Randall, Harry
Stross,Dr.Barnett(Stoke-on-Trent,C.)



Rankln, John
Swain, Thomas
TELLERS FOR THE AYES:


Redhead, E. C.
Swingler, Stephen
Mr. McCann and Mr. Whitlock.




NOES


Agnew, Sir Peter
Fletcher-Cooke, Charles
MacArthur, Ian


Aitken, W. T.
Fraser, Ian (Plymouth, Sutton)
Maclay, Rt. Hon. John


Allan, Robert (Paddington, S.)
Freeth, Denzil
McMaster, Stanley R.


Allason, James
Galbraith, Hon. T. G. D.
Macmillan, Maurice (Halifax)


Arbuthnot, John
Gammans, Lady
Maitland, Sir John


Atkins, Humphrey
Gardner, Edward
Markham, Major Sir Frank


Awdry, Daniel (Chippenham)
Gibson-Watt, David
Marshall, Douglas


Barber, Anthony
Gilmour, Ian (Norfolk, Central)
Marten, Neil


Barlow, Sir John
Gilmour, Sir John (East Fife)
Mathew, Robert (Honiton)


Barter, John
Glover, Sir Douglas
Matthews, Gordon (Meriden)


Batsford, Brian
Glyn, Dr. Alan (Clapham)
Maudling, Rt. Hon. Reginald


Baxter, Sir Beverley (Southgate)
Goodhew, Victor
Mawby, Ray


Beamish, Col. Sir Tufton
Gower, Raymond
Maxwell-Hyslop, R. J.


Bennett, F. M. (Torquay)
Grant-Ferris, R.
Maydon, Lt.-Cmdr. S. L. C.


Bennett, Dr. Reginald (Gos &amp; Fhm)
Green, Alan
Mills, Stratton


Berkeley, Humphry
Gresham Cooke, R.
Miscampbell, Norman


Biffen, John
Grosvenor, Lt.-Col. R. G.
Montgomery, Fergus


Biggs-Davison, John
Gurden, Harold
Morgan, William


Bingham, R. M.
Hall, John (Wycombe)
Meave, Airey


Birch, Rt. Hon. Nigel
Hamilton, Michael (Wellingborough)
Nicholson, sir Godfrey


Bishop, F. P.
Harris, Reader (Heston)
Nugent, Rt. Hon. Sir Richard


Black, Sir Cyril
Harrison, Col. Sir Harwood (Eye)
Oakshott, Sir Hendrie


Bossom, Hon. Clive
Harvey, Sir Arthur Vera (Macclesf'd)
Osborn, John (Hallam)


Bourne-Arton, A.
Harvey, John (Walthamstow, E.)
Osborne, Sir Cyril (Louth)


Boyd-Carpenter, Rt. Hon. John
Hastings, Stephen
Page, John (Harrow, West)


Boyle, Rt. Hon. Sir Edward
Heald, Rt. Hon. Sir Lionel
Page, Graham (Crosby)


Braine, Bernard
Henderson, John (Cathcart)
Pannell, Norman (Kirkdale)


Brewis, John
Hendry, Forbes
Partridge, E.


Brooman-White, R.
Hendry, Forbes
Pearson, Frank (Clitheroe)


Brown, Alan (Tottenham)
Hill, Mrs. Eveline (Wythenshawe)
Percival, Ian


Browne, Percy (Torrington)
Hirst, Geoffrey
Peyton, John


Buck, Antony
Hocking, Philip N.
Pickthorn, Sir Kenneth


Bullard, Denys
Holland, Philip
Pitman, Sir James


Bullus, Wing Commander Eric
Hollingworth, John
Pitt, Dam Edith


Carr, Compton (Barons Court)
Hornsby-Smith, Rt. Hon. Dame P.
Pott. Percivall


Chichester-Clark, R.
Howard, John (Southampton, Test)
Powell, Rt. Hon. J. Enoch


Clark, Henry (Antrim, N.)
Hughes Hallett, Vice-Admiral John
Price, David (E (Eastleigh)


Clark, William (Nottingham, S.)
Hughes-Young, Michael
Prior-Palmer, Brig Sir Otho


Cole, Norman
Hulbert, Sir Norman
Proud foot, Wilfred


Cooke, Robert
Hurd, Sir Anthony
Pym, Francis


Copper, A. E.
Hutchison, Michael Clark
Ramsden, James


Cooper-Key, Sir Neill
Iremonger, T. L.
Rawlinson, Sir Peter


Corfield, F. V.
Irvine, Bryant Godman (Rye)
Redmayne, Rt. Hon. Martin


Coulson, Michael
Johnson, Or. Donald (Carlisle)
Rees, Hugh


Craddock, Sir Beresford (Spelthorne)
Jones, Arthur (Northants, S.)
Rees-Davies. W. R.


Crawley, Aidan
Jones, Rt. Hn. Aubrey (Hall Green)
Renton, Rt. Hon. David


Critchley, Julian
Kerans, Cdr. J. S.
Ridsdale, Julian


Crowder, F. P.
Kerby Capt. Henry
Roberts, Sir Peter (Heeley)


Curran, Charles
Kerr, Sir Hamilton
Robinson, Rt. Hn. Sir R. (B'pool, S.)


Currie, G. B. H.
Leather, Sir Edwin
Rodgers, John (Sevonoaks)


Donaldson, Cmdr. C. E. M.
Leavy, J. A.
Russell, Ronald


Drayson, G. B.
Leburn, Gilmour
St. Clair, M.


du Cann, Edward
Legge-Bourke, Sir Harry
Scott-Hopkins, James


Duncan, Sir James
Lilley, F. J. P.
Seymour, Leslie


Eden, Sir John
Litchfield, Capt. John
Sharples, Richard


Elliot, Capt. Walter (Carshalton)
Longbottom, Charles
Shaw, M.


Elliott,R. W.(Newc'tle-upon-Tyne,N.)
Longden, Gilbert
Shepherd, William


Errington, Sir Eric
Loveys, Walter H.
Skeet, T. H. H.


Farr, John
Lucas, Sir Jocelyn
Smith, Dudley (Br'tnt'd &amp; Chiswick)


Fell, Anthony
Lucas-Tooth, Sir Hugh
Smithers, Peter


Finlay, Graeme
McAdden, Sir Stephen
Spearman, Sir Alexander







Stodart, J. A.
Tiley, Arthur (Bradford, W.)
Webster, David


Stoddart-Scott, Col. Sir Malcolm
Touche, Rt. Hon. Sir Gordon
Whitelaw, William


Storey, Sir Samuel
Turner, Colin
Williams, Dudley (Exeter)


Studholme, Sir Henry
Turton, Rt. Hon. R. H.
Wills, Sir Gerald (Bridgwater)


Summers, Sir Spencer
van Straubenzee, W. F.
Wilson, Geoffrey (Truro)


Taylor, Sir Charles (Eastbourne)
Vane, W. M. F.
Wolrige-Gordon, Patrick


Taylor, Edwin (Bolton, E.)
Vaughan-Morgan, Rt. Hon. Sir John
Woodhouse, C. M.


Taylor, Frank (M'ch'st'r, Moss Side)
Walder, David
Woodnutt, Mark


Teeling, Sir William
Walker, Peter



Thatcher, Mrs. Margaret
Walker-Smith, Rt. Hon. Sir Derek
TELLERS FOR THE NOES:


Thompson, Sir Kenneth (Walton)
Wall, Patrick
Mr. Peel and Mr. McLaren.


Thornton-Kemsley, Sir Colin
Ward, Dame Irene

New Clause.—(REDUCTION OF RATE OF PROFITS TAX ON CO-OPERATIVE SOCIETIES, &C.)

(1)As from the beginning of August 1963, and in relation to any trade or business carried on by a society registered under the Industrial and Provident Societies Acts 1893 to 1961, or under the Industrial and Provident Societies Acts (Northern Ireland) 1893 to 1955, the rate at which the profits tax is to be charged shall be three per cent.

(2) This section shall have effect notwithtanding any enactment to the contrary whether in this Act or elsewhere.—[Mr. Houghton.]

Brought up, and read the First time.

Motion made, and Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 152. Noes 215.

Division No. 130.]
AYES
[9.44 p.m.


Ainsley, William
Hale, Leslie (Oldham, W.)
Padley, W. E.


Albu, Austen
Hamilton, William (West Fife)
Paget, R. T.


Allen, Scholefieid (Crewe)
Hannan, William
Pannell, Charles (Leeds, W.)


Awbery, Stan (Bristol, central)
Harper, Joseph
Parkin, B. T,


Beaney, Alan
Hart, Mrs. Judith
Pavitt, Laurence


Bellenger, At. Hon. F. J.
Hill, J. (Midlothian)
Pearson, Arthur (Pontypridd)


Bennett, J. (Glasgow, Bridgeton)
Hilton, A. V.
Pentland, Norman


Benson, Sir George
Holman, Percy
Prentice, R. E.


Blackburn, F.
Houghton, Douglas
Price, J. T. (Westhoughton)


Blyton, William
Howell, Charles A. (Perry Barr)
Probert, Arthur


Bowden, Rt. Hn. H. W. (Leics,S.W.)
Howell, Denis (Small Heath)
Randall, Harry


Bowles, Frank
Hoy, James H.
Rankin, John


Boyden, James
Hughes, Cledwyn (Anglesey)
Redhead, E. C.


Braddock, Mrs. E. M.
Hughes, Hector (Aberdeen, N.)
Roberts, Albert (Normanton)


Bray, Dr. Jeremy
Hunter, A. E.
Robertson, John (Paisley)


Broughton, Dr. A. D. D.
Hynd, H. (Accrington)
Robinson, Kenneth (St, Pancras, N.)


Butler, Mrs. Joyce (Wood Green)
Hynd, John (Attercliffe)
Rogers, G. H. F. (Kensington, N.)


Callaghan, James
Irvine, A. J. (Edge Hill)
Ross, William


Carmichael, Nell
Irving, Sydney (Dartford)
Silverman, Julius Aston)


Chapman, Donald
Janner, Sir Barnett
Silverman, Sydney (Nelson)


Collick, Percy
Jay, Rt. Hon. Douglas
Skeffington, Arthur


Craddock, George (Bradford, S.)
Jenkins, Roy (Stechford)
Slater, Mrs. Harriet (Stoke, N.)


Cronin, John
Jones, Dan (Burnley)
Slater, Joseph (Sedgefield)


Crosland, Anthony
Jones, J. Idwal (Wrexham)
Small, William


Crossman, R. H. S.
Jones, T. W. (Merioneth)
Sorensen, R. W.


Cullen, Mrs. Alice
Kelley, Richard
Soakice, Rt. Hon. Sir Frank


Dalyell, Tam
Kenyon, Clifford
Spriggs, Leslie


Davies, G. Elfed (Rhondda, E.)
Lawson, George
Steele, Thomas


Davies, Harold (Leek)
Ledger, Ron
Stones, William


Davies, Ifor (Gower)
Lee, Frederick (Newton)
Stross, Dr.Barnett(Stoke-on-Trent,C.)


Davies, S. O. (Merthyr)
Lever, L. M. (Ardwlck)
Swain, Thomas


Delargy, Hugh
Lewis, Arthur (West Ham, N.)
Swingler, Stephen


Dempsey, James
Lubbock, Eric
Thomas, Iorwerth (Rhondda, W.)


Diamond, John
Mahon, Dr. J. Dickson
Thompson, Dr. Alan (Dunfermline)


Dodds, Norman
McBride, N.
Thornton, Ernest


Donnelly, Desmond
MacDermot, Niall
Tomney, Frank


Edwards, Rt. Hon. Ness (Caerphilly)
Mclnnes, James
Wade, Donald


Edwards, Robert (Bilston)
McKay, John (Wallsend)
Wainwright, Edwin


Edwards, Walter (Stepney)
Mallalieu, E. L. (Brigg)
Warbey, William


Fernyhough, E.
Mallalieu, J.P.W. (Huddersfield, E.)
Watkins, Tudor


Finch, Harold
Mapp, Charles
Willey, Frederick


Fitch, Alan
Marsh, Richard
Williams, D. J. (Neath)


Foot, Dingle (Ipswich)
Mason, Roy
Williams, LI. (Abertillery)


Forman, J. C.
Mendelson, J. J.
Williams, W, R. (Openshaw)


Fraser, Thomas (Hamilton)
Millan, Bruce
Williams, W, T. (Warrington)


Galpern, Sir Myer
Milne, Edward
Willis, E. C. (Edinburgh, E.)


George,LadyMeganLloyd(Crmrthn)
Mitchison, G. R.
Winterbottom, R. E.


Ginsburg, David
Monslow, Walter
Yates, Victor (Ladywood)


Gourlay, Harry
Oliver, G. H.



Grey, Charles
O'Malley, B. K.
TELLERS FOR THE AYES:


Griffiths, Rt. Hon. James (Llanelly)
Dram, A. E.
Mr. McCann and Mr. Whitlock.


Griffiths, W. (Exchange)
Oswald, Thomas





NOES


Agnew, Sir Peter
Grant-Ferris, R.
Page, John (Harrow, West)


Aitken, W. T.
Green, Alan
Page, Graham (Crosby)


Allan, Robert (Paddington, S.)
Gresham Cooke, R.
Pannell, Norman (Kirkdale)


Allason, James
Grosvenor, Lt,-Col. R. G.
Partridge, E.


Arbuthnot, John
Gurden, Harold
Peel, John


Atkins, Humphrey
Hall, John (Wycombe)
Percival, Ian


Awdry, Daniel (Chippenham)
Hamilton, Michael (Wellingborough)
Peyton, John


Barber, Anthony
Harris, Reader (Heston)
Pickthorn, Sir Kenneth


Barlow, Sir John
Harrison, Col, Sir Harwood (Eye)
Pilkington, Sir Richard


Barter, John
Harvey, Sir Arthur Vere(Macclesi'd)
Pitman, sir James


Botsford, Brian
Harvey, John (Walthamstow, E.)
Pitt, Dame Edith


Baxter, Sir Beverley (Southgate)
Hastings, Stephen
Poet, Percivall


Beamish, Col. Sir Tufton
Heald, Rt. Hon. Sir Lionel
Powell, Rt. Hon. J. Enoch


Bennett, F. M. (Torquay)
Henderson, John (Cathcart)
Price, David (Eastleigh)


Bennett, Dr. Reginald (Gas &amp; Fhm)
Hendry, Forbes
Prior-Palmer, Brig. Sir Otho


Berkeley, Humphry
Hiley, Joseph
Proudfoot, Wilfred


Bitten, John
Hill, Mrs. Eveline (Wythenshawe)
Pym, Francis


Biggs-Davison, John
Hirst, Geoffrey
Ramsden, James


Bingham, R. M.
Hocking, Philip N.
Rawlinson, Sir Peter


Birch, Rt. Hon. Nigel
Holland, Philip
Redmayne, Rt. Hon. Martin


Bishop, F. P.
Hollingworth, John
Rees-Davies, W. R.


Black, Sir Cyril
Hornsby-Smith, Rt. Hon. Dame P.
Renton, Rt. Hon. David


Bossom, Hon. Clive
Howard, John (Southampton, Test)
Ridedale, Julian


Bourne-Arton, A.
Hughes Hallett, Vice-Admiral John
Roberts, Sir Peter (Heeley)


Boyd-Carpenter, Rt. Hon. John
Hughes-Young, Michael
Robinson, Rt. Hn. Sir R. (B'pool,S,)


Boyle, Re, Hon. Sir Edward
Hulbert, Sir Norman
Rodgers, John (Sevenoaks)


Braine, Bernard
Hurd, Sir Anthony
Russell, Ronald


Brewis, John
Hutchison, Michael Clark
St. Clair, M.


Brooman-White, R
Iremonger, T. L.
Scott-Hopkins, James


Brown, Alan (Tottenham)
Irvine, Bryant Godman (Rye)
Seymour, Leslie


Browne, Percy (Torrington)
Johnson, Dr. Donald (Carlisle)
Sharpies, Richard


Buck, Antony
Jones, Arthur (Northants, S.)
Shaw, M.


Bullard, Denys
Jones, Rt. Hn, Aubrey (Hall Green)
Shepherd, William


Bullies, Wing Commander Eric
Kerans, Cdr. J. S.
Skeet, T. H. H.


Carr, Compton (Barons Court)
Kerby, Capt. Henry
Smith, Dudley (Br'tnf'd &amp; Chiswick)


Chichester-Clark, R.
Kerr, Sir Hamilton
Smithera, Peter


Clark, Henry (Antrim, N.)
Leather, Sir Edwin
Spearman, Sir Alexander


Clark, William (Nottingham, S.)
Leavey, J. A.
Stodart, J. A.


Cole, Norman
Leburn, Gilmour
Stoddart-Scott, Col. Sir Malcolm


Cooke, Robert
Legge-Bourke, Sir Harry
Storey, Sir Samuel


Cooper, A. E,
Lilley, F. J. P.
Studholme, Sir Henry


Cooper-Key, Sir Neill
Litchfield, Capt. John
Summers, Sir Spencer


Corfield, F. V.
Longbottom, Charles
Taylor, Sir Charles (Eastbourne)


Coulson, Michael
Longden, Gilbert
Taylor, Edwin (Bolton, E.)


Craddock, Sir Beresford (Spelthorne)
Loveys, Walter H.
Taylor, Frank (M'ch'st'r, Moss Side)


Critchley, Julian
Lucas, Sir Jocelyn
Teeling, Sir William


Crowder, F. P.
Lucas-Tooth, Sir Hugh
Thatcher, Mrs. Margaret


Curran, Charles
McAdden, Sir Stephen
Thompson, Sir Kenneth (Walton)


Currie, G. B. H.
MacArthur, Ian
Thornton-Kemsley, Sir Colin


Donaldson, Cmdr. C. E. M.
McLaren, Martin
Tiley, Arthur (Bradford, W.)


Drayson, G. B.
Maclay, Rt. Hon. John
Touche, Rt. Hon. Sir Cordon


du Cann, Edward
McMaster, Stanley R.
Turner, Colin


Duncan, Sir James
Macmillan, Maurice (Halifax)
Turton, Rt. Hon. R. H.


Eden, Sir John
Maitland, Sir John
van Straubenzee, W. R.


Elliot, Capt. Walter (Carshalton)
Markham, Mayor Sir Frank
Vane, W. M. F.


Elliott, R. W, (Newctle-upon-Tyne,N.)
Marshall, Douglas
Vaughan-Morgan, Rt. Hon. Sir John


Errington, Sir Eric
Marten, Neil
Walder, David


Farr, John
Mathew, Robert (Honiton)



Fell, Anthony
Matthews, Gordon (Meriden)
Walker, Peter


Finlay, Graeme
Maudling, Rt. Hon. Reginald
Walker-Smith, Rt. Hon. Sir Derek


Fletcher-Cooke, Charles
Mawby, Ray
Wall, Patrick


Fraser, Ian (Plymouth, Sutton)
Maxwell-Hyslop, R. J.
Ward, Dame Irene


Freeth, Denzil
Maydon, Lt.-Cmdr. S. L. C.
Webster, David


Galbraith, Hon. T. C. D.
Mills, Stratton
Whitelaw, William


Gammans, Lady
Miscampbell, Norman
Williams, Dudley (Exeter)


Gardner, Edward
Montgomery, Fergus
Wills, Sir Gerald (Bridgwater)


Gibson-Watt, David
Morgan, William
Wilson, Geoffrey (Truro)


Gilmour, ran (Norfolk, Central)
Neave, Airey
Wolrige.Gordon, Patrick


Gilmour, Sir John (East Fife)
Nicholson, Sir Godfrey
Woodhouse, C. M.


Glover, Sir Douglas
Nugent, Rt. Hon. Sir Richard
Woodnutt, Mark


Glyn, Dr. Alan (Clapham)
Oakshott, Sir Hendrie



Goodhew, Victor
Osborn, John (Hallam)
TELLERS FOR THE NOES:


Gower, Raymond
Osborne, Sir Cyril (Louth)
Mr. Frank Pearson and Mr. Rees.

New Clause.—(INCOME TAX: EXTENSION OF EXEMPTION FOR CHARITIES TO CERTAIN NATIONAL VOLUNTARY ORGANISATIONS.)

(1) Sections 447 (exemption from tax on rents interest, dividends and annual payments

belonging to charities, etc.), 448 (exemption from tax in respect of lands owned and occupied by charities and of profits of trade carried on by charities) and 450 (procedure for claiming exemption under last three preceding sections) of the Income Tax Act 1952, and section 15 (charities, superannuation funds and other special cases) of the Finance Act 1962,


shall apply to a national voluntary association receiving or eligible to receive a grant under section 3 of the Physical Training and Recreation Act 1937 (which authorises grants towards the, funds of national voluntary organisations having, as objects, the provision of facilities for physical training and recreation) as they apply to a charity.
(2) In this section "national voluntary organisation" has the same meaning as in the said Act of 1937 and "charity" has the same meaning as in the said section 448.—[Mr. Redhead.]

Brought up, and read the First time.

Mr. E. C. Redhead: l beg to move, That the Clause be read a Second time.
Despite its somewhat involved terminology, this proposed new Clause has the simple and limited purpose of exempting from the payment of Income Tax nonprofit-making bodies which are concerned with the development of amateur sport. I stress "non-profit-making"that is to say, the Clause does not seek to provide concessions for any commercial body connected with sport—and the development of amateur sport.
This proposal is prompted by the Report of the Wolfenden Committee on Sport, which was rather significantly entitled "Sport and the Community", and, in particular, paragraph 162, which in fairness should be quoted in full. It states:
We know that the law on income tax is a highly complicated and specialised field and we would only intrude into it with diffidence and hesitation. But even though any amendment to the definition of a legal charity may be impracticable, is there not room for offering exemption from income tax to a new category of non-profit-making national bodies concerned with the development of amateur sport?
The reason for this observation and this suggestion of serious consideration to the proposal contained in that paragraph was given in the preceding paragraph which I will take the liberty of quoting, also:
Our evidence has also shown us that a number of the Governing Bodies of amateur sport feel bitterly about their liability to pay tax on their annual surplus, in the same way as a trading company. They claim that it places an additional and unnecessary handicap on their work of developing their sport for the general welfare of the community.
It does seem unreasonable that Income Tax should be charged on income which, in many instances, is the sole source of revenue enabling an amateur, non-profit-making body to do its work. So far from

accepting the justice of their liability to Income Tax, we are recommending that statutory grant aid should be available to enable such bodies to extend their work of coaching and development. Such relief would, in my submission, be justified not only in the interests of the organisations to which the proposal refers and the amateur sports which they are concerned to foster and encourage, but, indeed, on wider, general community grounds.
Again, I would quote from the Report of the Wolfenden Committee—a brief extract from paragraph 3:
At the same time, it is a reasonable assumption that if more young people had opportunities for playing games fewer of them would develop criminal habits. But our major thesis is that there is a positive 'play' element in the life of young people, which can be neglected only to the disadvantage of both the individual and society.
Paragraph 6 of the Report reads:
Again, there are claims that participation in games, especially of a competitive kind, will encourage the development of qualities which are valuable both to the individual and to society. Courage, endurance, self-discipline, determination, self-reliance, are ail qualities which the sportsman, in the broadest sense of the term, has at least the opportunity of developing in the pursuit of his sport. They spring as readily from mountaineering as from rowing, from fencing as from football; and they can be acquired by the 'rabbit' as well as by the international. On this ground alone it is clear that a valuable element in the growth of individuals, especially of young people, would disappear if games and outdoor activities ceased to be practised.
I imagine that those sentiments will find a very general acceptance on the part of hon. Members. The importance of amateur sport to the health of the community is today widely recognised, as. indeed, is stressed throughout this very important and significant Report of the Wolfenden Committee, and the importance of sport in the life of the community gained further emphasis only a few days ago in a debate in another place, as recently as 22nd May, when it was stressed that the Government themselves had a responsibility to encourage the development of sport in all reasonable, possible ways.
In that debate the noble Lord, Lord Hailsham, putting on the appropriate hat for this particular rôle, not only expressly accepted that the Government had a definite responsibility but went to great pains to point out that the Government already, in various ways, rendered assistance to the encouragement of sport,


assistance which, he claimed, had been steadily mounting. The noble Lord went on to announce the Government's intention to support it by financial grants in various directions, including grants to national voluntary organisations for their headquarters administration. I expect that in reply to the proposal which I am putting to the Committee we shall hear rather a lot about the Government's assistance in this respect.
10.0 p.m.
I do not decry, nor do I seek to minimise, the amount of financial aid already given from public funds to various aspects of sporting activities. On the contrary, I welcome and approve it, and I also welcome the announcement that there is to be further financial aid, though, even now, spread over the country the figures quoted do not, on average, represent a tremendous increase in the revenues of many of the associations which are concerned with the encouragement of sport.
But surely it is utterly incongruous to give financial grants from public funds with one hand and claim credit for so doing and yet, with the other hand, persist in taking away, by the continued imposition of Income Tax, from the very organisations whose financial need is very widely recognised even in the fact that grants are made available from public funds.
As one official of such an organisation put it to me recently, "In this proposal we are not asking the Government to give us any of their money. We are asking for the privilege to retain a little more of our own." Some of the bodies with which the new Clause is concerned are facing serious financial difficulties and a severe limitation of their ability to expand and develop the sports to which so much importance is attached in general. I would quote one example, and I emphasise that it is only one of many which can be quoted and which others of my hon. Friends will doubtless be able to supplement in the debate.
Hon. Members have been circularised by the Amateur Boxing Association, one of the bodies seriously affected, which, in paragraph 5 of its memorandum, made the submission that
It is not putting our case too strongly to say that at the present time amateur boxing is struggling for its existence and that its ultimate survival may depend upon the ability

of the Amateur Boxing Association, its Associations and its clubs to draw upon capital during this crucial period. The liability for Income Tax greatly reduces the resistance of the Amateur Boxing Association and its members to this challenge since it is impossible to build up any real reserves. Some indication that the fears expressed in this paragraph are not groundless can be found in the fact that when the London Association was formed, in 1949, there were 262 member clubs, whereas at the end of 1961–62 Season this number had fallen to 176. This decline is due almost completely to the lack of finance.
Whatever one may feel about boxing, and I know that there are prejudices on the subject in some quarters, I suggest that if these details are, as I believe them to be, indicative of the plight of various other comparable organisations it is a serious matter and one which the Committee should seek to remedy by any means which lie within its power.
I am not doing any special pleading for one association. This is one of several, and I hasten to emphasise that the new Clause includes all comparable bodies without any differentiation at all. I anticipate two grounds of objection to these proposals. If one is to judge from replies given by the Chancellor of the Exchequer, or on the Chancellor's behalf, to a number of hon. Members and to honorary secretaries of amateur boxing associations who have written to him on the subject, I anticipate that it will be contended that the cost of such a concession would be prohibitive.
I quote, for example, from the reply given to his representations to the honorary secretary of the A.B.A. It said:
Although Mr. Maudling is very sorry to learn of your difficulties he does not think that it would be possible to give amateur boxing tax relief without doing something for all amateur sports
He is afraid that such a considerable exemption is out of the question.
To my hon. Friend the Member for Manchester, Ardwick (Mr. L. M. Lever) the reply was:
A concession over the whole field of amateur sport would be a very large extension to which the Government do not feel able to agree.
Clearly, the implication of those two statements is that the cost would be heavy, indeed prohibitive. I would not refer to the question of cost of such a concession as in itself being conclusive if it were otherwise demonstrable that the concession was just, right and sensible, as I contend it to be in this


instance. Nevertheless, I felt it expedient to probe the question of cost. I accordingly put down a Question to the Chancellor on 2nd May as follows: I asked him
…whether he will give an estimate of the cost of implementing the suggestion contained in paragraph 162 of the Report of the Wolfenden Committee on Sport of offering exemption from Income Tax to non-profit-making national bodies concerned with the development of amateur sport.
The Economic Secretary replied:
I am afraid that the necessary information is not available."—[OFFICIAL REPORT, 2nd May, 1963; Vol. 676, c. 136.]
I must confess that I was bewildered by that reply. As I have stated, the Chancellor has twice said that an exemption of such magnitude could not be contemplated, yet the Economic Secretary says that he has no information about the cost.
The Royal Commission on the Taxation of Profits and Income advanced arguments against any substantial extension of exemptions for charities, and, in general, I would not contest that argument. Nor would it be appropriate that I should go into detail on them on this Clause. But my proposal is very closely defined and very strictly limited, and in the special circumstances of the case I believe that it is wholly justified.
I hope, therefore, that the Financial Secretary will be responsive to this plea. I ask that at least he will agree that the lack of adequate information seems to indicate that there has not yet been the careful attention to this which the Wolfenden Committee's standing would justify. I hope that he will agree that the Government's contradictory replies indicate an absence of information, and that in these circumstances he will give an undertaking that this proposal will be seriously examined and the necessary information obtained, in the recognition that here the Government could give a tangible gesture of their desire to foster and encourage amateur sport as a vital factor in the life of the community.

Mr. Tam Dalyell: In the interests of clarity I shall present in detail the difficulties of one organisation, the Amateur Athletic Association, and in the interests of brevity some slight references to the problems of several

others. Mr. E. H. L. Clynes, secretary of the Association writes:
This is a question we have been pursuing through official quarters for many years without any success apart from the fact that income tax inspectors have always dealt with our Association with every consideration within their powers of discretion and within the existing law. The income tax authorities have refused our plea that our organisation and the work it does is charitable and, therefore, entitled to exemption, although a major part of the Association's work is in teaching teachers and other persons how to become honorary coaches as well as teaching athletes for which work we are grant-aided by the Ministry of Education authorities. They regard our championships and other promotions attended by the public as being liable for tax despite the fact that the net profits from these meetings are necessary to enable the A.A.A. to conduct its work and also the British Amateur Athletic Board to raise sufficient funds to enable them to finance our international commitments such as sending teams to the European championships.
These profits are liable for payment of tax before being used for this purpose. We would point out that our profits from these meetings are not sufficient to enable the Association to carry out all the work of development and coaching it feels it should carry out. Although the Association has been in receipt of grants from the Ministry of Education towards the cost of our coaching work this and our income from meetings is still insufficient for the work we ought to do. Of course, there is the anomaly that the money accepted in grants from the Ministry has to be higher than it need be because of the amount of tax to be paid.
I am sure that you are aware the sport has been able to scrape along on this small budget because of the tremendous amount of voluntary service given to it in all fields. Officials helping at the public meetings at the White City and at other venues, the profits of which are taxable, do so at their own expense. It, in fact, these officials charged their expenses to the meetings the profits would be much less.
The amount of tax paid by the athletics governing organisations has been considerable having regard to the small amount of money we have to run the sport and in the last financial year has amounted to £2,000. We are getting increased income to help the sport from television fees, but this will increase our tax liability.
This goes in some detail, for which I do not apologise, into the problems of one of the great organisations. I think that the same could be said of a number of other big organisations which have written to me. In some ways, I am more concerned about the smaller and less formidable organisations than the Amateur Athletic Association. I select the problems of just one of them, the


Scottish Bowling Association. The secretary, Mr. John Linning, says this:
Many of our clubs find it very difficult to make ends meet, and any such relief would be most welcome…The number of clubs in membership of the Scottish Bowling Association is 779, many of them in rural areas, with small membership but providing a much needed amenity.
In the light of Crowther, in the light of Albemarle, and in the light of Wolfenden, which was quoted by my hon. Friend the Member for Walthamstow, West (Mr. Redhead), and in view of the desire to assist sport which is shared by all political parties and all parts of society, is it not undesirable that we should nevertheless impede its progress in this way?
There is one other aspect on which I will briefly touch—the taxation of sporting equipment. The recommendation is that there should be Purchase Tax relief on equipment bought through the ruling bodies in amateur sports. Just two examples will suffice—the 25 per cent. Purchase Tax on fencing equipment, which causes considerable hardship, and the tax on barbell sets—

The Deputy-Chairman: Order. I am sorry, but equipment is not dealt with in the Clause.

Mr. Dalyell: Finally, the feeling is that the yield from taxation is not of such a magnitude as to be vital to the Treasury, but it has considerable and almost critical importance to many of the sporting organisations, particularly the humbler sporting organisations. It is for that reason that I am glad to support the new Clause.

10.15 p.m.

Mr. Barber: I agree entirely with all that the hon. Member for Walthamstow, West (Mr. Redhead) said about the desirability of the Government and also people outside the Government doing everything possible to encourage amateur sport in this country. Indeed, while I do not want to go over the ground which was dealt with at some length in the debate in another place the other day, I think it is fair to say that the Government of doing a great deal to help amateur sport.
I also accept, as would anybody with experience of these matters either in his constituency or elsewhere, the fact that

there are some amateur associations and sporting activities which could benefit greatly from more financial assistance. The hon. Gentleman gave one example, and his hon. Friend the Member for West Lothian (Mr. Dalyell) referred to the difficulties of the Amateur Athletic Association and the Scottish Bowling Association.
In moving the new Clause the hon. Gentleman referred to the recommendation of the Wolfenden Committee, and I shall therefore not take up the time of the Committee by going over the background of this very important question. Suffice it to say that this new Clause proposes to extend the exemption from income tax which charities enjoy and to extend the relief to a
national voluntary association receiving or eligible to receive a grant under Section 3 of the Physical Training and Recreation Act. 1937…
It is important that the Committee should bear in mind that that Act empowers the Minister of Education to make grants to national or to local voluntary organisations for providing facilities for physical training and recreation, including the training and supply of teachers and leaders. It also empowers local authorities to provide similar facilities, or to assist a local voluntary organisation to do so, and of course considerable direct grants have been made for this purpose.
The real objection to the new Clause is that the promotion of sport, as is admitted by the hon. Gentleman, is not, as the law stands at the moment, a charitable purpose, and however much one approves of the policy of encouraging people to be players rather than spectators, it does not follow that any financial assistance should be by way of taxation relief as distinct from an open subsidy.
We are not, I suggest, here concerned so much with the question whether sport or recreation should be assisted, as with the question of how this should be done. The new Clause would, in effect, extend the definition of a charitable purpose so as to provide taxation relief. The hon. Gentleman fairly referred to the recommendation of the Royal Commission on Taxation on this matter, but he did not quote what the Royal Commission said. I think that I should quote what it said


because this bears directly on the hon. Gentleman's proposal. The Royal Commission said that the charity exemption
does amount in effect to a grant of public moneys towards the furtherance of such causes as come the legal category of charity without Parliamentary control of their individual purposes or of their administration",
and it thought that the proposal was open to criticism on this ground. Indeed, its view was that the activities which rank for exemption from Income Tax under the heading of charity ought to be narrowed rather than widened.
No action has been taken to restrict the scope of the charity exemption for tax purposes, but I think that the reasons which the Royal Commission gave are cogent ones for reaching the conclusion that there are serious objections to widening it even further.

Mr. Dalyell: Would not the hon. Gentleman agree that whereas there might be considerable force in his argument in respect of the major sports, it hardly applies to minor sports such as fencing and weight-lifting which do nor normally get a subsidy?

Mr. Barber: I doubt it very much. If one takes the view that in principle it is better to provide assistance by means of an open subsidy which can be discussed in the House, and one can discuss the administration and the purposes to which the money is given, rather than by way of taxation relief which would follow if we were to accept the principle behind this Clause, I think there would be serious objections to so doing.
Even if one could ignore the objections in principle to a widening of charity relief, the present proposal would raise very serious difficulties. The hon. Member for Walthamstow, West, in moving the Second Reading of this Clause, said that it made no discrimination as between one amateur association and another. The Wolfenden Committee mentioned that there were 200 national bodies with a direct or indirect interest in the development of sport represented on the Central Council for Physical Recreation and not many fewer on the Scottish Council for Physical Recreation. It spoke of:
national voluntary organisations in great profusion and variety, responsible for the development of individual activities
The bodies which gave evidence to the Wolfenden Committee ranged from such organisations as the Amateur Athletic

Association and the M.C.C. to the Clay Pigeon Shooting Association and the Cambridge University Tiddleywinks Club. As the Report commented:
Here indeed is richness.
The idea of offering Income Tax exemption to this profusion and variety of organisations is not an attractive one. The test for exemption which the Clause proposes is eligibility to receive a grant under Section 3 of the Physical Training and Recreation Act, 1937. This embraces all non-profit-making organisations and empowers grants to be made to any of them at the discretion of the Minister or of the local authority for specified purposes connected with sport and recreation. I should have thought a definition like that is too wide for the purpose of giving a tax exemption which all could claim as a matter of right. It would be extremely difficult to frame a definition which would satisfactorily pick out national governing bodies of particular games and recreations from the great diversity of bodies to which I have referred.

Mr. Lubbock: The hon. Gentleman has mentioned the Cambridge University Tiddleywinks Club. I am sure he was being facetious, because that would not be eligible under the Physical Training and Recreation Act, 1937.

Mr. Barber: I was, in fact, making a joke. I hoped that was appreciated.
On the question of cost, on which the hon. Member for Walthamstow, West sought information, perhaps I could say to him something which I hope will go some way to explain the difficulty we are in. I think I have shown, even if I ignore the particular body which has been referred to by the hon. Member for Orpington (Mr. Lubbock), that there is great difficulty in identifying all the various bodies in question. To make a close estimate of the cost of the proposed exemption would, in fact, involve compiling a list of eligible bodies and inquiring of the local inspector in each case what the income of the body is and what tax it pays. Some of the bodies in question have probably very little income indeed, but others earn large sums from admission charges to important matches and tournaments. The only figure which is available centrally is the aggregate trading profits of all sports clubs. This would include all local clubs, with which the


hon. Member is not directly concerned, and exclude national bodies which are not trading. It would also exclude all investment income, so the figure would be of no assistance.
For this reason, it is not possible to give the hon. Member anything approaching an accurate figure of the cost of the Clause unless we went to considerable trouble. All that I can tell him—and this is not inconsistent with what was said by my hon. Friend in answer to the question—is that if we were to grant exemption and if matters proceeded with this new category of charities which he would have us approve as the tax exemption has proceeded in relation to existing charities, not only would the cost be fairly significant, at any rate to start with, but it would tend to rise rapidly like the cost of the charities exemption itself.
We have done a certain amount by way of abolishing Schedule B on amenity land, and the abolition of Schedule A on owner-occupiers is bound to be of some assistance to some of these organisations. The Government are doing a great deal to encourage physical training and recreation. The hon. and learned Member was very fair in the way in which he welcomed what the Government are doing. I remind the Committee of two sets of figures. Over a three-year period, the grant to national voluntary organisations under the Physical Training and Recreation Act, referred to in the new Clause, will have more than doubled. The total capital public expenditure on facilities for sport and recreation has increased from just over £15 million in 1960–61 to £25·9 million last year, and we expect it to rise this year to more than £29 million.
This has been a useful debate in raising the question not of the extent of the financial assistance which should be provided for sport but how best to provide it. But I hope that the Committee will take the view that if it is desirable for Exchequer assistance to be given to any kind of activity it is better to do so by direct financial assistance which is subject to the normal process of Parliamentary control. I am sure that that is the right approach, but if it is not enough, I have pointed out that in any event the form of the Clause is far too wide, and that I cannot advise the Committee to accept it.

Mr. G. R. Mitchison: Before the hon. Member sits down, will he say that he will never again mention the sums which the Government give with one hand without mentioning those which they take away with the other?

Mr. Arthur Lewis: I was amazed by the Minister's reply. He said that he could not do something, but had no idea how much it would cost. He said that it would mean a lot of hard work and difficulty. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) put down a Question, to which he received a typical Treasury reply.
If we asked how much Surtax had been given back to Surtax payers since the Government have been in power, they could find that easily. Many hundreds of millions of pounds have been given back. But in this case the Minister is not in a position to give the figures. Before we leave the new Clause he should tell us that he will consider the matter again to see how much the new Clause will cost and that if, as I believe to be the case, the cost is negligible, he will see whether he cannot do what we ask, even if not in the Bill. He should promise that if he finds that it does not cost much, he will see whether something can be done about it.

10.30 p.m.

Mr. L. M. Lever: I must press the Minister on this matter. The proposal from this side of the Committee for taxation remissions to amateur sport is reasonable. When the Minister tells us that the amount that the Government are spending in assistance to amateur sport will rise to £29 million this year, he should remember that it is a very small proportion of a Budget of nearly £6,000 million to be paid as a token of our devotion to the health of the younger generation and as assistance to those clubs which are helping amateur sport.
I feel that we should not allow this matter to be passed over in this formal way. I think that at least we should have an undertaking from the Minister that, although he has not got any figures available now as to what it would cost if he were to remit taxation as proposed in the new Clause, he will inquire into the cost and report to the House at a later stage.
As a beginning, could not some remiss ion of tax be given to those clubs which are already receiving grants or subsidies under Section 3 of the Physical Training and Recreation Act, 1937? At least in regard to those clubs the Government have some information about their activities, otherwise they would not have given them the subsidies.
We cannot dismiss the matter as lightly as that. It is an important matter and affects the youth of the community and the health of the community. I would rather spend money on giving the youth of the nation facilities for participating in amateur sport and promoting good health than spend it on trying to recover its health once it has gone. Prevention is better than cure. I believe that in training our youth in sport we are making a contribution towards building its character from which the nation will benefit.
After all, when we are talking about surpluses—I wish that my right hon. and hon. Friends on the Opposition Front Bench would keep quiet while I am speaking. [HON. MEMBERS: "Hear, hear."] The Front Benches have ample opportunities for airing their views, and I think it quite right that occasionally back benchers should have their say. I propose to have mine now, irrespective of what my right hon. and hon. Friends say.
I think that we should have an undertaking that an inquiry will be made into the cost. If the Minister will give such an undertaking it will, I believe, satisfy us at least for the time being. We must remember that members of these amateur sporting clubs pay subscriptions. Those subscriptions are not paid out of relief of revenue; they are paid out of the taxed incomes of those members.
I hope, therefore, that the Minister will give us such an undertaking and will not dismiss the subject lightly. Then, perhaps, we can look at it again at some future date.

Mr. Barber: I hope that, apart, perhaps, from one deviation, I did not treat the matter lightly, because I agree entirely with the hon. Gentleman that this is a very important matter. Indeed, the Government would not be contributing to the

extent which they do towards sport unless it were considered to be a very important matter.
Perhaps I can say to the hon. Gentleman that in dealing with the question of cost I was, in courtesy, and as best as I could, answering the point made by the mover of the new Clause. However, I should like to make it clear that although I gave the explanation at the end of what I said, the principal reason why I cannot advise the Committee to accept the Clause is because, quite frankly, I agree with the Royal Commission that whatever the cost might be it is far better that assistance should be provided directly and subject to the normal opportunities of Parliamentary control rather than by way of taxation relief.
The hon. Member made the point that he did not think that enough assistance was being given to sport. I gave some figures and I will not go over them again, but this is an entirely separate matter. It may well be that if the hon. Member had the opportunity and was the Lord President of the Council, he would treble or even quadruple the amount of assistance given to sport, but it does not necessarily follow that it should be given by means of taxation relief.

Mr. L. M. Lever: Will the hon. Gentleman look into how much this would cost if I put down a Question?

Mr. Barber: I would look into it, but the difficulties are very considerable. If, in the morning, the hon. Member reads in HANSARD what I have said, he will appreciate that the difficulties are very real. I doubt that we would be justified in going further.

Mr. Redhead: That answer was entirely unsatisfactory. If the hon. Gentleman had been disposed to say a little more forthrightly that he appreciated our purpose and was prepared to consider it in more detail and with much more care than has been evidenced by the Treasury, we might have been disposed to accept an undertaking of that character, but in all the circumstances and in view of the unsatisfactory nature of the reply, I shall advise my right hon. and hon. Friends to divide the Committee.

Question put, That the Clause be read a Second time—

The Committee divided: Ayes 124, Noes 175.

Division No. 131.]
AYES
[10.36 p.m.


Ainsley, William
Griffiths, W. (Exchange)
Pentland, Norman


Allen, Scholefleld (Crewe)
Hale, Leslie (Oldham W.)
Price, J. T. (Westhoughton)


Awbery, Stan (Bristol, Central)
Hamilton, William (West Fife)
Probert, Arthur


Beaney, Alan
Hannan, William
Redhead, E. C.


Bellenger, Rt. Hon. F. J.
Harper, Joseph
Reynolds, G. W.


Bennett, J. (Glasgow, Bridgeton)
Hill, J. (Midlothian)
Roberts, Albert (Normanton)


Blackburn, F.
Holman, Percy
Robertson, John (Paisley)


Boardman, H.
Houghton, Douglas
Rogers, G. H. R. (Kensington, N.)


Bowden, Rt. Hn. H. W. (Leics,S.W.)
Howell, Denis (Small Heath)
Ross, William


Bowles, Frank
Hoy, James H.
Silverman, Julius (Alton)


Braddock, Mrs. E. M.
Hughes, Cledwyn (Anglesey)
Silverman, Sydney (Nelson)


Bray, Dr. Jeremy
Hughes, Hector (Aberdeen, N.)
Skeffington, Arthur


Broughton, Dr. A. D. D.
Hunter, A. E.
Slater, Mrs. Harriet (Stoke, N.)


Butler, Mrs. Joyce (Wood Green)
Hynd, John (Attercliffe)
Slater, Joseph (Sedgefield)


Callaghan, James
Irving, Sydney (Dartford)
Small, William


Carmichael, Neil
Janner, Sir Barnett
Sorensen, R. W.


Craddock, George (Bradford, S.)
Jay, Rt. Hon. Douglas
Soskice, Rt. Hon. Sir Frank


Cronin, John
Jenkins, Roy (Stechford)
Spriggs, Leslie


Crosland, Anthony
Jones, Dan (Burnley)
Steele, Thomas


Crossman, R. H. S.
Jones, J. Idwal (Wrexham)
Stones, William


Cullen, Mrs. Alice
Jones, T. W. (Merioneth)
Stross,Dr.Barnett(Stoke-on-Trent,C.)


Dalyell, Tam
Kelley, Richard
Swain, Thomas


Davies, G. Elfed (Rhondda, E.)
Lawton, George
Swinger, Stephen


Davies, Harold (Leek)
Ledger, Ron
Thomas, Iorwerth (Rhondda, W.)


Davies, S. O. (Merthyr)
Lever, L. M. (Ardwick)
Thompson, Dr. Alan (Dunfermline)


Delargy, Hugh
Lewis, Arthur (West Ham, N.)
Tomney, Frank


Dempsey, James
Lubbock, Eric
Wade, Donald


Diamond, John
McBride, N.
Wainwright, Edwin


Donnelly, Desmond
McCann, John
Warbey, William


Edwards, Rt. Hon. Ness (Caerphilly)
MacDermot, Niall
Watkins, Tudor


Edwards, Walter (Stepney)
Mclnnes, James
Whit'ock, William


Fernyhough, E.
McKay, John (Wallsend)
Wigg, George


Finch, Harold
Mapp, Charles
Willey, Frederick


Fitch, Alan
Mendelson, J. J.
Williams, D. J. (Neath)


Foot, Dingle (Ipswich)
Millan, Bruce
Williams, LI. (Abertillery)


Forman, J. C.
Milne, Edward
Williams, W. it. (Openshaw)


Fraser, Thomas (Hamilton)
Mitchison, G.R.
Willis, E. C. (Edinburgh, E.)


Galpern, Sir Myer
O'Malley, B. K.
Winterbottom, R. E.


George,LadyMeganLloyd(Crmrthn)
Cram, A. E.
Yates, Victor (Ladywood)


Ginsburg, David
Oswald, Thomas



Gourlay, Harry
Pavitt, Laurence
TELLERS FOR THE AYES:


Grey, Charles
Pearson, Arthur (Pontypridd)
Mr. Charles A. Howell and




Mr.Ifor, Davies




NOES


Agnew, Sir Peter
Corfield, F. V.
Harris, Reader (Heston)


Aitken, W. T.
Coulson, Michael
Harrison, Col. Sir Harwood (Eye)


Allason, James
Craddock, Sir Beresford (Spetthorne)
Harvey, John (Walthamstow, E.)


Atkins, Humphrey
Critchley, Julian
Hastings, Stephen


Awdry, Daniel (Chippenham)
Crowder, F. P.
Heald, Rt. Hon. Sir Lionel


Barber, Anthony
Currie, G. B. H.
Hendry, Forbes


Barter, John
Donaldson, Cmdr. C. E. M.
Hill, Mrs. Eveline (Wythenshawe)


Batsford, Brian
Drayson, G. B.
Hill, J. E. B. (S. Norfolk)


Bennett, Dr. Reginald (Gos &amp; Fhm)
du Cann, Edward
Hirst, Geoffrey


Berkeley, Humphry
Duncan, Sir James
Hocking, Philip N.


Biffen, John
Elliot, Capt. Walter (Carshalton)
Holland, Philip


Bingham, R. M.
Elliott,R.W.(Newc'tle-upon-Tyne, N.)
Hollingworth, John


Bishop, F. P.
Emery, Peter
Hornsby-Smith, Rt. Hon. Dame P.


Black, Sir Cyril
Errington, Sir Eric
Hughes-Young, Michael


Bossom, Hon. Clive
Farr, John
Hulbert, Sir Norman


Bourne-Arton, A.
Felt, Anthony
Hutchison, Michael Clark


Boyd-Carpenter, Rt. Hon. John
Finlay, Graeme
Iremonger, T. L.


Boyle, Rt. Hon. Sir Edward
Fletcher-Cooke, Charles
Irvine, Bryant Cadman (Rye)


Braine, Bernard
Galbraith, Hon. T. G. D.
Johnson, Or. Donald (Carlisle)


Brewis, John
Gammans, Lady
Jones, Arthur (Northants, S.)


Brooman-White, R.
Gibson-Watt, David
Jones, Rt. Hn. Aubrey (Hall Green)


Brown, Alan (Tottenham)
Gilmour, Ian (Norfolk, Central)
Kerans, Cdr. J. S.


Browne, Percy (Torrington)
Gilmour, Sir John (East Fife)
Kerr, Sir Hamilton


Bullard, Denys
Glover, Sir Douglas
Leavey, J. A.


Chichester-Clark, R.
Glyn, Dr. Alan (Clapham)
Leburn, Gilmour


Clark, Henry (Antrim, N.)
Goodhew, Victor
Legge-Bourke, Sir Harry


Clark, William (Nottingham, S.)
Cower, Raymond
Lilley, F. J. P.


Cole, Norman
Gresham Cooke, R.
Litchfield, Capt. John


Cooke, Robert
Grosvenor, Lt.-Col. R. G.
Longbottom, Charles


Cooper, A. E.
Gurden, Harold
Longden, Gilbert


Cooper-Key, Sir Neill
Hamilton, Michael (Wellingborough)
Loveys, Walter H




Lucas, Sir Jocelyn
Pitman, Sir James
Studhotme, Sir Henry


Lucas-Tooth, Sir Hugh
Pitt, Dame Edith
Summers, Sir Spencer


MacArthur, Ian
Pott, Percivall
Taylor, Edwin (Bolton, E.)


McLaren, Martin
Powell, Rt. Hon. J. Enoch
Taylor, Frank (M'ch'et'r, Moss Side)


Maclay, Rt. Hon. John
Price, David (Eastleigh)
Tooling, Sir William


McMaster, Stanley R.
Prior-Palmer, Brig Sir Otho
Thomas, Peter (Conway)


Macmillan, Maurice (Halifax)
Proudfoot, Wilfred
Thompson, Sir Kenneth (Walton)


Markham, Major Sir Frank
Ramaden, James
Thornton-Kemsley, Sir Colin


Mathew, Robert (Honiton)
Rawlinson, Sir Peter
Tiley, Arthur (Bradford, W.)


Matthews, Gordon (Meriden)
Redmayne, Rt. Hon. Martin
Touche, Rt. Hon. Sir Gordon


Mawby, Ray
Rees, Hugh
Turner, Colin


Maxwell-Hyslop, R J.
Rees-Davies, W. R.
Turton, Rt. Hon. R. H.


Maydon, Lt.-Cmdr. S. L. C.
Renton, Rt. Hon. David
van Straubenzee, W. P.


Mills, Stratton
Ridedale, Julian
Vaughan-Morgan, Rt. Hon. Sir John


Miscampbell, Norman
Roberts, Sir Peter (Heoley)
Walder, David


Morgan, William
Robinson, Rt. Hn. Sir R. (B'pool, S.)
Walker, Peter


Oakshott, Sir Hendrie
Rodgers, John (Sevenoaks)
Walker-Smith, Rt. Hon. Sir Derek


Osborn, John (Hallam)
Russell, Ronald
Wail, Patrick


Page, John (Harrow, West)
St. Clair, M.
Ward, Dame Irene


Page, Graham (Crosby)
Seymour, Leslie
Webster, David


Pannell, Norman (Kirkdale)
Sharpies, Richard
Whitelaw, William


Partridge, E.
Shaw, M.
Wills, Sir Gerald (Bridgwater)


Pearson, Frank (Clitheroe)
Skeet, T H. H.
Wilson, Geoffrey (Truro)


Peel, John
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Wolrige-Gordon, Patrick


Percival, Ian
Smithers, Peter
Woodhouse, C. M.


Peyton, John
Spearman, Sir Alexander
Woodnutt, Mark


Pickthorn, Sir Kenneth
Stoddart-Scott, Col. Sir Malcolm



Pllkington, Sir Richard
Storey, Sir Samuel
TELLERS FOR THE NOES:




Mr. Ian Fraser and Mr. Pym.

New Clause.—(EXEMPTON FROM ESTATE DUTY OF MONEY PASSING TO CERTAIN GALLERIES, MUSEUMS, ETC.)

(1) Where money passes or is deemed to pass on the death of a person dying after the commencement of this Act to a body to which this section applies, that money shall not be taken into account for the purpose of estimating the principal value of the estate passing on the death or the rate at which estate duty is chargeable thereon and that money shall be exempt from estate duty.

(2) The bodies to which this section applies are the National Gallery, the British Museum or any other similar national institution, the National Art Collections Fund, the society known as "the Friends of the National Libraries" or any other fund or society formed for the purpose of contributions to public museums, galleries or libraries and accepted by the Treasury as of public importance for that purpose. — [Dr. Stross.]

Brought up, and read the First time.

10.45 p.m.

Dr. Barnett Stross: I beg to move, That the Clause be read a Second time.
This Clause refers to exemption from Estate Duty of money passing to certain art galleries, museums, etc. I note that on this occasion the Economic Secretary is to reply whereas, in July, 1959, we received our answer from the then Financial Secretary. That leads me to hope that we shall fare better than on that occasion—when we could not have failed more. I well remember the answer we got then from the Financial Secretary—which, I thought, was a little specious—was completely demolished by my hon. and learned Friend the Member for Kettering (Mr. Mitchison).
Tonight, we are looking at the possibility of offering some further fiscal advantage to possible benefactors of art galleries and museums. What we ask for is not new; the door is at least three-quarters open, and we want to see it opened just a little further, because examination of the situation has shown me—and I think that many hon. and right hon. Members know that it is so —that there are already considerable incentives offered to would-be benefactors.
The present fiscal advantages fall into three categories. First, Estate Duty is remitted in respect of pictures, prints,

books, manuscripts, works of art or scientific collections that appear to the Treasury to be of national scientific or historical interest and are given or bequeathed for national purposes to a university, a county council or a municipal corporation. That is a very real fiscal advantage, but there is a second one. Objects similar to those I have just mentioned are additionally exempted under Section 40 of the 1930 Finance Act, and subsequent Acts, when they are sold by private treaty to national or provincial museums. The third advantage is that gifts made inter vivos of money or money's worth to a museum or gallery are exempt if the donor survives for only the first year instead of the usual five.
By this Clause we ask only that if money is bequeathed it should not be aggregated, and that the heir should not have to pay Estate Duty on it. We argue that there is no serious distinction between bequeathing a Renoir or the value of a Renoir between the painting or the value of the painting. The fact that it is at present not possible so to treat such a bequest has been reviewed again and again by many authorities interested in the arts, including the Gulbenkian Committee in its 5th and 6th reports on museums and galleries, and in its recent excellent survey of provincial museums and galleries. They are satisfied that the present provisions are such that the lack of this further provision for which I am pleading is a deterrent to help that might well come to museums and art galleries, and they are particularly sensible of the need of museums and art galleries in the provinces.
I mentioned a Renoir or the value of a Renoir. It is quite possible that a spate of Renoirs will be bequeathed to the nation at some time in the future—possibly within half a generation. Every great builder or developer knows that he has not "arrived" if he has not got a Renoir. They all have one. This is fascinating; I like it. It is fashionable, and such people can afford it. Some of them, I hope, will give their Renoirs to the nation, and there will be no aggregation. But if they have not got a Renoir and say, "We will give £50,000 instead to the National Gallery or the Tate Gallery", their heirs must suffer. This does not seem reasonable.
I am aware of the kind of argument that has been used against this suggestion, because I have consulted the report of the debate that we had in 1959 on this subject and the answer that we had from the Financial Secretary at that time. The answer is that there is a difference between the two gifts—between a gift in kind such as a painting or a piece of sculpture, and a gift of money. We heard on the last Clause how eloquently the Financial Secretary pleaded that we must have Parliamentary control over money that there is no Parliamentary control if people bequeath it or if there is tax remission on it, whereas if it is given in a lump sum direct from the Treasury to the organisation concerned we know what we are doing and we can decide how it should be spent.
There is something to be said for that argument, but not as much as was suggested when we last debated this matter. I suggest that there is so little in this argument that I hope we shall this time recover some of the ground that we lost last time and attain our objective.
Everyone knows that in other countries different and much more far-reaching methods are used. This is a very modest proposal. Most hon. Members, I think, view with a good deal of caution the methods used in the United States. I certainly cannot agree with some of the expert advisers, whether in the Standing Commission or elsewhere, who think that we should go all out and use the American technique.
However, be that as it may—and it would be out of order to stress this point —I think it is generally accepted that I am asking for very little. This proposal is not likely to cost very much. The situation today is really urgent. I ask the Economic Secretary to say that he recognises that many of these institutions for which I am pleading need financial help, that in many cases the fabric is decaying and the roofs need patching. Some of them leak. Labelling, conservation and preservation of articles that must at all costs be well cared for are such that we are losing some of the very symbols of our past. Perhaps I have stated this badly, but I think hon. Members know what I mean when I speak of our history being wrapped up in the contents of many museums, which show how we live and what we have come from. We have

no right to be careless of our own heritage.
I remember a few years ago in the House mentioning, I think almost with tears in my eyes, that I knew of one gallery in the South-West, a national institution, where priceless old masters' drawings had become mildewed because the roof was leaking. Conditions at that gallery are better now, but at that time the curator had to spend all his spare time on the roof patching it to prevent the rain from coming in because there was no money available. That fault was not necessarily Ours or that of the Treasury. The local authority was responsible in that case and should have taken much more care, as I know it is doing now. But in many of these institutions not owned or supported by local authorities, institutions which were privately endowed, most of them about eighty or ninety years ago, with endowments which were quite sufficient then but which are quite inadequate now, there is little or no help. It is high time that the pleas of the Standing Commission in the Report to which I have referred were accepted and the Treasury found some money at once to ensure that help is given.
In 1960, I think it was, when we had our last debate on the arts—it was on a Friday—the Standing Commission was asked to survey the whole subject with a view to enabling the Government to ascertain what help, and how much, was needed. In its Report the Standing Commission made clear that quite a lot of money is required immediately. The Economic Secretary knows that an offer of £10,000 for all the area organisations is not regarded as very much, and it is only £10,000 that the Government have offered towards the costs of the areas councils of the organisations concerned with all the provincial museums and galleries. Ten times that amount would do to start with.
If the Economic Secretary will give us a satisfactory reply showing that the Treasury take the matter seriously—I believe that that is its attitude—I should plead with my right hon. and hon. Friends not to divide the Committee on this issue. I would rather we did not divide. Over the years, there has been constant pressure for a generous attitude towards the arts by the Government of the day, whichever Government it may be. I like


to think that this pressure has produced results. It has certainly produced quite excellent results fairly recently. But we cannot go on with a little help from the Government and nothing from the private benefactor. If we want help, as we do, from the private benefactor, we should give him the opportunity afforded by the new Clause. For those reasons, not taking the matter at length because of the time, I commend the new Clause to the Committee.

Mr. W. R. Rees-Davies: I oppose the new Clause, so pleasantly and ably moved by the hon. Member for Stoke-on-Trent, Central (Dr. Stross), for several reasons which I can state quite briefly. First, it is right to recall that this debate is similar in many respects to the debate we have just had about sport. Everyone was in favour of amateur sport. Everyone was in favour of being able to provide some sort of financial advantage to amateur sport. The real question related to the method by which that aim was to be achieved. In that case, hon. Members opposite were suggesting that it should be done by fiscal advantage, and they sought to argue that the method should be by the remission of tax.
In this case, it is suggested that a similar aim should be achieved by another technique, to divert bequests from other worthy objects to the benefit of the specific objects expressed in the new Clause. Both of them are wrong because both of them are the wrong system to achieve what is the right objective in itself.
11.0 p.m.
The hon. Gentleman and those hon. Gentlemen who support him no less than I are great advocates of trying to assist the fine arts, but I am quite satisfied that the method which he wishes to pursue is not the right method by which this can be pursued. I believe we must be equal in tax under the law. The principle must be the same, and if one is to be entitled, either by way of an object or by way of money, to be given a fiscal advantage in order to divert money to the National Gallery or museums it will merely mean that other worthy objects, be they research, natural history, birds, ornithology, or what have you, will as a result suffer, because the money will be left under bequests in this direction.
It does not entirely end there. In each of the objectives in subsection (2) of the new Clause the fact is that the Treasury would have to accept
as of public importance for that purpose
any bequest to the benefit of
the National Gallery, the British Museum…the National Art Collections Fund…the Friends of the National Libraries'
and indeed any public society, provincial or otherwise, for the purpose; because it is not applied to the object: it is applied to money, and obviously, each of these societies and museums would be able usefully, as being of public importance, to use that money.
The other reason I oppose it is this. This is again going perilously near to what one may call the American system, and I do not think this country is fully apprised of quite how unfortunate that system is. It of course was of great value to the Americans, particularly in years gone by, but I believe that it will not be long before they themselves abrogate that system which is really rapidly becoming a farce. The situation today is that the curators of the main museums in America are approached in advance by a millionaire or a potential millionaire. I can cite the names of the curators and I can cite examples, if need be, arising from my own visit there when I discussed these matters with the men concerned. They are asked, "What do you want us to give you?" They then proceed to beg the curators to allow them to purchase various works of art—of course, nothing less than about 50,000 dollars: the more the better—tax-free, the basis being that they enjoy them during their lifetime and they pass on their death to the museums concerned. This, of course, has been of use in America where they did not have the heritage which we are fortunate enough to have in this country. We are not so much concerned with obtaining new works of art as they have been during the last twenty or thirty years.
I am bound to say—I do not say this in any sense offensively—that I do find it a most extraordinary situation that Socialists can support the suggestion which is coming tonight from the Socialist benches, when they of all people have done so much to try to break down, with heavy Estate Duty, the opportunities to preserve the very heritage which we seek. Let me


give an example of this. Take the Duke of Devonshire, who has, I suppose, one of the finest art collections in this country, who in recent years has had to sell off many of the finest works of art in his collection—although I am happy to say he still retains a good many—for the purpose of paying heavy Estate Duty. We have here today in this country one of the greatest collections of silver which has probably ever been seen in the world, the Brownlow Collection, which the House of Commons cannot be bothered to buy and did not make an effort to preserve, with the Belton wine cistern which belonged to the Speaker two centuries ago. This is the way we go.
The fact is that if we want a heritage we do not want to put it all into museums. What is the point of putting all the finest eighteenth century furniture into museums`? It cannot be seen properly there. We want to retain it in the right surroundings. The hon. Gentleman has effectively debated with me the necessity of maintaining the historic homes, and the hon. Gentleman is one of those who, I know, share my view.
If we want to encourage this, do not let us tear down by heavy Estate Duty the great homes and heritages which can preserve the great works of art to be seen by all, but let us give every encouragement to enable them to be maintained, provided that they are open freely to the public. If hon. Members opposite like to criticise that these homes are not sufficiently open to the public, I will support them to ensure that they are more open and the public can more enjoy them. My argument is that where money is bequeathed or bequests are made in kind, in sculpture or pictures, the wrong approach is to try to give fiscal advantage either before or after death to encourage a man to divert money which should be regarded as absolutely equal for the purpose he wants. We should take a little less away in Estate Duty and give an opportunity for the great estates and the works of art to be maintained, and we should give a direct incentive to ensure that they are maintained so that the public can see them.
I know a great deal more about sport than I am ever likely to know about the arts.:rust as we should support sport though bodies like the A.A.A. by subsidy, so likewise we should give support here

by direct subsidy to buy pictures for the nation and to encourage their showing to the public in the right setting. But, for heaven's sake, do not let us try to persuade the Cottons and the Clores to divert after their death money to the National Gallery which equally could go to helping the blind or to research work of some kind. I am not prepared that we should stand for the betterment of the fine arts by pinching for them what should equally belong to other institutions.

Sir Barnett Janner: I cannot understand the argument of the hon. Member for the Isle of Thanet (Mr. Rees-Davies). It is entirely illogical in present circumstances. If an estate contains articles which an institution similar to those mentioned in the new Clause would want to buy or have in its collection, that article is anyhow exempt from Estate Duty. Its value is not included in the value of the estate, and if it is given by the trustees or an executor to an art gallery it carries no Estate Duty. Its value is not included for the purpose of estimating the amount due ad valorem for Estate Duty. What on earth, therefore, is the hon. Member talking about? If this is the case it means that precisely what the hon. Member wants is already possible. If it is kept in such a home and then transferred to an institution, no duty is payable on it. The only time that duty becomes payable on it is if it is sold.
In these circumstances, the hon. Member for the Isle of Thanet gets all he wants. He says that Estate Duty should not be charged on residences and furniture and the other assets of an estate, excluding articles of art. I am sure the Economic Secretary will agree that that argument is not sustainable. I make this appeal to the Economic Secretary: why not allow the portion of an estate which is bequeathed to a gallery or museum to be treated in precisely the same way as if the individual concerned had brought a work of art for that gallery or museum?
If a person grants in his will a sum of money for precisely the same purpose, his beneficiaries have to pay full Estate Duty on the full amount, whereas if the money had been used a week before his death to buy an article which a museum would want it would be excluded.
I cannot see the logic of preventing the money itself from being exempt if the deceased could have avoided the duty on that sum by using it to buy an article of art a few minutes before his death. It may be argued that money bequeathed to an institution may be used for other purposes than purchasing works of art. That, too, is a false argument, because a museum exists for the purpose of exhibiting works of art. The money would only be used to further the objects of the institution, and as long as there were an undertaking that the money would be used for such purposes, perhaps the Government would be prepared to agree to this Clause. This would mean nothing other than what happens at present.
11.15 p.m.
It is not a question of an art gallery buying it. The law at present is that these articles need not be sold to an art gallery. That is what the hon. Member for the Isle of Thanet was talking about. A person can retain the article in his home. He can lend it to a gallery. The only thing he is prevented from doing is sending it out of the country. He would be prevented from sending it out of the country only if he intended to sell it to somebody abroad. If he intended to sell it to somebody abroad, the Board of Trade could insist upon the British Museum or other institution purchasing the article because it was of value to the nation. Museums are institutions which exist for the purpose of buying—not for the purpose of selling, but for the purpose of exhibiting.
In an attempt to compress this argument into a small space I may have confused the issue. The point is that the law at present is that the executors of someone who has works of art are not called upon to include the value of those works of art, if they are accepted as such, in the aggregate of the estate on which duty is assessed. For example, if a person left an estate of £500,000, of which £400,000 consisted of articles of that description, the assessment for duty purposes would be £100,000 only.
It might be an inducement to people to leave money to the various institutions. An honest person who wanted the finest articles preserved for the benefit of the nation would take the view that it would

be better for him to save the money than to buy articles himself, because they might be of no value, whereas an institution would purchase articles it required and which were of value. if this concession is not granted, people who want to preserve articles of this description for the nation will be encouraged to purchase articles which may not be required by museums but which on the purchasers' death will go to museums, instead of museums being in a position to purchase exactly what they want.
This is an extremely important point. I ask the Economic Secretary to grant this concession.

Mr. du Cann: I first say to the hon. Member for Stoke-on-Trent, Central (Dr. Stross) that the length of his speech—which we are all aware he deliberately compressed and we all understand and are grateful for that—was in inverse ratio to his sincerity, with which we are extremely familiar. To the hon. Member for Leicester, North-West (Sir B. Janner), who seemed a little nervous about the precis work he had done on his speech, I say that I found his view extraordinarily clear. The fact that he spoke for less time than he might have done did not affect the vigour and clarity of his argument.
The hon. Member for Stoke-on-Trent, Central described in detail the concessions there are in respect of Estate Duty in this field at present. I followed that description as closely as I could and could not fault it; therefore I shall not repeat it. He described the various substantial exemptions from Estate Duty of one form and another. A point which has a particular bearing on a question asked by the hon. Member for Leicester, North-West is that the object of these concessions is to keep works of art in the United Kingdom. We regard this as extremely important. I think it reasonable to claim that the present system which has merits, and may have demerits I dare say, has had great successes in that regard. I am sure that is something which the Committee will recognise.
I am bothered about one aspect of the new Clause. The bodies which the hon. Member for Stoke-on-Trent specified in the Clause do not include universities or


county councils and municipal corporations. It may well be that it was his intention to include them, but I am advised that the Clause does not. I think he would agree that this is a possible defect in the Clause.

Dr. Stross: I entirely agree. I apologise for the wording, which I thought better and more comprehensive, but in any event the Treasury can always put it right.

Mr. Mitchison: I am sorry that my hon. Friend has apologised for the wording. I may perhaps assure the Committee that the wording was deliberately very moderate. It was confined to museums and galleries. The reason it was confined to museums and galleries was that it follows the recommendation, now three limes repeated, of the Standing Commission on Museums and Galleries. I regard that distinguished body as singularly competent to make recommendations about museums and galleries, but not quite so competent to make recommendations about universities.

Mr. du Cann: I had assumed that the truth was something as the hon. and learned Member for Kettering (Mr. Mitchison) has described, but, if the Government were to accept this Clause we would immediately find very heavy pressure put by the universities and provincial museums and galleries—some of which are very important, such as the museum and art gallery in Birmingham—to have it extended to them. That is one of the problems which has a particular bearing. It is extraordinarily difficult to draw a line.

Mr. Mitchison: I am sorry to interrupt again, but I do not think that is a real difficulty. Even a small place like Kettering has the Friends of the Kettering Art Gallery. That is the way in which it would be possible to apply this Clause to university museums, the Birmingham one or any other place of this kind. They have only to form a society or fund for the purpose and it is done if the Treasury approves.

Mr. du Cann: That is exactly the point. I am not arguing that there would be difficulty about doing that, but that there would be tremendous pressure to see that this concession was extended as widely as possible. Pressure would

come from Kettering, Taunton and all over the place. I am not saying that there is any physical difficulty about it. I am saying that the door would be open very wide.
As the hon. and learned Member rightly said, the Clause follows successive recommendations made by the Standing Commission, and, as he did not point out—though it would reinforce his argument—also made by the trustees of the National Gallery in 1960 and 1962. I remind the Committee quickly of the terms of reference of the Commission:
To stimulate generosity and attract the efforts of those who aspire to become public benefactors.
It is not surprising, perhaps, that the Commission concentrated on tax relief. But, as my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) said, by inference tonight and more directly on other occasions, there are other ways of encouraging private benefaction than at the expense of the Exchequer, which means at the expense of the taxpayer.
The hon. Member for Stoke-on-Trent, Central primarily concentrated his attention on the suggestion that it is illogical to give exemptions for things and not to give some benefit for making gifts. I understand the point, but I am bound to say that the reasons for which exemptions were given in 1896 are still valid, and I genuinely believe them to be valid. I am all for modernisation, and I do not believe in old things when old things have outlived their usefulness, but the arguments here are incontrovertible. In the debate of 1959 the hon. Member will find those reasons, and I need not re-state them tonight.

Dr. Stross: I am sure the hon. Member agrees that if we are not careful we shall fill our art galleries and museums with things which, however precious and desirable in themselves, will overwhelm the institutions. We want to use these art galleries and museums as places of culture and education. Their collections must be balanced. More and more we should leave precious things in the possession of folk in their own homes. Galleries must have not everything but balanced collections. It is for this reason that I plead for assistance to the provincial museums.

Mr. du Cann: The hon. Member is leading me to a point which I intended to make in a moment. I am grateful to him for making the point clear. I appreciate his feeling and to some extent I share it, for we share the same objects. I hope that he will believe me in that.
I draw his attention to the fact that the Government feel strongly about this matter, and I draw his attention particularly to Clause 51, from which he will see that there is no exemption for maintenance funds there. This has been our view all along, and we believe it to be the right view and to be the inevitable view.
My hon. Friend the Member for Isle of Thanet said a good deal—in what I fully understand was a shortened speech —about the American practice. I well understand that he speaks with a special knowledge and expertise in these matters, of which we have had experience in our debates formerly. He rightly said that the American authorities are very much dissatisfied with the working of their present system. In a sense it is the American system which the hon. Member for Stoke-on-Trent, Central wishes to import. The difference between the Americans and ourselves lies in the fact that they have no state aid for the arts. The American system applies to charities as a whole, which brings me to a point which I tried to make in reply to an intervention by the hon. and learned Member for Kettering—that once we start with the proposal of the hon. Member for Stoke-on-Trent, Central it will be extraordinarily difficult to draw the line. I think that it will be quite impossible. I do not believe that it could be held anywhere.
Finally, the Americans do not have any parallel estate duty relief such as the hon. Member described and such as the hon. and learned Member for Leicester, North-West mentioned, and which has done a great deal of good.
11.30 p.m.
The hon. Member for Stoke-on-Trent, Central referred to the speech last year of the then Financial Secretary, now my right hon. Friend the Minister of Education. He made the point then that the better way to help the arts was by direct grant over which Parliament had control. I do not think that any Government spokesman is entitled to make that

claim unless be is prepared to back it up with evidence of what the Government are doing, and that evidence should be satisfactory as a whole to the Committee.
I should like, therefore, to make the point very shortly that provision for the arts has increased each year since 1959–60, and, to talk particularly about the arts museums and galleries, those grants have grown from £3·3 million in 1959–60 to £5·5 million in 1963–64. It is not as if we are resting just on a matter of principle, and that is that. We are actually doing something to improve and help these museums and galleries and to enable them to expand.
Nor is that all. The purchase grants will amount in all to over £400,000 in the current year, and, in addition, the Government have over the past five years supplemented the normal allocation for purchases by special grants totalling over £1·1 million. These are not inconsiderable sums.
The hon. Gentleman talked about the need for galleries to have what they want. This is enabling them to do just that very thing successfully and satisfactorily. In addition, the Government have also made full use of their powers under the Finance Act to accept outstanding pictures and furniture in lieu of Estate Duty. In the past year chattels to the value of about £158,000 have been acquired in this way from the estate of the Earl of Powis.
Total expenditure on the arts is estimated at over £11 million in the current year which compares with about £3·5 million in 1951–52. There is one piece of news which I am sure the Committee will be glad to hear. My right hon. Friend the Minister of Education—and I should like to pay a tribute to him for the work which he did for the arts as Financial Secretary—with the concurrence of my right hon. Friend the Chief Secretary, who is now in his place I am pleased to see, has agreed in principle to a special grant towards the purchase for the Victoria and Albert Museum of a bust which has only recently come to light and which is a masterpiece of Italian Gothic sculpture by the great Giovanni Pisano. A Supplementary Estimate giving details of this grant will be laid before the House in due course. It may not be possible to show this acquisition for many months, but when it is on view


I am sure it will be recognised as being among the most notable treasures of the Museum.
I am glad to be able to quote this in addition to the other factual information which I have given the House of monetary assistance, because it indicates that, when my right lion. Friend talked about this selective form of Parliamentary help as opposed to indiscriminate help, at least we have a system which is being successful and which is satisfying the kind of criteria which the hon. Gentleman quite rightly described to the Committee.

Dr. Stross: I wonder if it is possible to be told whether anything will be done in the very near future for the provincial galleries and museums following the outstanding Report to which the hon. Gentleman referred tonight.

Mr. du Cann: The hon. Gentleman is extremely good at getting in just ahead of what I am about to say. He made the point, as he was entitled to do, that we were not being generous enough to the provincial museums and galleries. I do not think that he was quite fair in quoting the figure of £10,000. If I may I would refer him first to an Answer which my right hon. Friend gave to his colleague the hon. Member for Bishop Auckland (Mr. Boyden) on 23rd May and to an Answer which I gave to my hon. Friend the Member for Exeter (Mr. Dudley Williams) on 19th March. We tried to make between us—I am sorry if we did not do it clearly enough, though I always feel that my right hon. Friend is a master of clarity—two points. First, that the Report of the Standing Commission on Museums and Galleries makes a number of recommendations over a very wide field, and, secondly, that these recommendations must be considered. We cannot very well implement them, if we decide to do so, immediately. We must have time, for there are a number of people we have to consult and there are a number of bodies which it is right that we should consult.
Secondly, we felt able, in advance of detailed consideration of the Report, to accept in principle, subject to the approval of Parliament, the Standing Commission's recommendation that the Exchequer should give financial assistance, not exceeding the amount sub-

scribed locally, towards the initial and continuing expenses of schemes of mutual help and co-operation on matters of conservation of authorities in the same area. This is the figure of only £10,000 which has been mentioned. The objects to which this amount is to be devoted are to be decided this year. This is therefore promptness, and my right hon. Friend is to be congratulated rather than criticised on having been so quick to translate willingness to help into action.
Finally, on the subject of cost; I have tried to explain that if we accepted this proposal we would open the door widely. I think that that point has probably been taken. The hon. Member said that he had estimated that his proposal would cost very little. In the first instance it might cost about £10 million, but we are perfectly certain that over the years the cost would grow very rapidly. We are not clear that the benefits to the nation would necessarily be commensurate with, equivalent to, or necessarily even better than, the present system.
Therefore, while we are all agreed on the objectives of the hon. Member for Leicester, North-West, the hon. Member for Stoke-on-Trent, Central and my hon. Friend the Member for the Isle of Thanet, and while we have every sympathy for them, I am sorry to say that, for the reasons I have given, a little inadequately in view of the time factor, we cannot agree with the specific proposal which has been made. None the less, we are all grateful to the hon. Member for Stoke-on-Trent, Central for giving us the opportunity to discuss an important matter about which we all feel strongly.

Question put and negatived.

Mr. William Warbey: I beg to move,
That the Chairman do report Progress and ask leave to sit again.
I would do so very briefly in order to get an indication from the Government of what they have in mind. In view of the beneficent atmosphere of sweetness and light which has been spread on our deliberations by our recent debate on cultural matters, I would be very reluctant at this late hour to introduce the clouds of controversy. The issues which would be raised on this new Clause would be of a far-reaching character,


touching the lives of the majority of the citizens of this country.
As I understood that there was a general feeling in the Committee that it would be for the convenience of the Committee that we should certainly not sit later than midnight, in view of the time that is still left to deal with the remainder of the Bill. I would have thought in all the circumstances that it would be possible for us to conclude our deliberations tonight and to start again fresh tomorrow afternoon on what is a substantial and controversial issue.

The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter): It is certainly not our wish to ask the Committee to take its proceedings tonight very late. On the other hand, the Committee must have in mind the fact that we still have a considerable amount of work to do to conclude the Committee stage.
If my calculations are right, on the basis of what I understand are the selections, we still have ahead of us, including the hon. Members new Clause, some 14 further issues to discuss, and I do not need to stress to any hon. Member experienced in this Committee, in view of the time of year, how essential it is to conclude this stage of the Bill before we part tomorrow night or Friday morning. It is a question, therefore, of a sensible distribution of our work as between the two days or nights.
I should have thought that while the hon. Member attaches importance to his Clause—and I suppose that we all attach importance to our Clauses and want them to come on at an agreeable time of the day—it would be wiser to deal with this matter in a proper way, and, I hope, without undue length, tonight. The new Clause in the name of the hon. Member for Sowerby (Mr. Houghton) entitled "One hundred per cent. disablement pensions: relief"—which has the significance that there are likely in your view, Sir William, to be five other new Clauses which would be discussable with it—it is the series of Clauses relating to allowances in respect of disability—would, perhaps, be a more appropriate one with which to open our day's proceedings tomorrow.
I hope, therefore, that the Committee will feel able to deal with the new Clause

in the name of the hon. Member for Ash-field (Mr. Warbey) and then we might proceed with the feeling that we have given ourselves a reasonable chance of coping with our work tomorrow without imposing an inconveniently late sitting on a day which would, I think, be particularly inconvenient to a lot of hon. Members who may, no doubt, be not entirely disinterested in the times of the sleeping car expresses. I hope, therefore, that the hon. Member will not press the matter and thereby consume time at this stage on the Motion to report Progress.

Mr. Warbey: Having made a mild protest, in keeping with the general atmosphere of the Committee, and also, perhaps, having given a warning to hon. Members, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

New Clause.—(INCOME TAX: RENT ALLOWANCE.)

If a person proves that in the year of assessment he has paid rent for a dwelling-house in his occupation, he shall be allowed a deduction from the amount of income tax with which he is chargeable equal to tax at the standard rate on the rent so paid:
Provided that—

(a) where the rent is for a full year, no deduction shall exceed tax at the standard rate on a sum equal to one-third part of the gross rateable value of the dwelling-house or on the sum of one hundred pounds, whichever sum is the less;
(b) where the rent is for a period of less than a year, no deduction shall exceed tax at the standard rate on such part of whichever is the less of the two said sums as bears to the whole sum the same proportion as the period bears to the year; and
(c) for the purposes of this section no person shall be treated as in occupation of more than one dwelling-house at any one time—[Mr. Warbey.]

Brought up, and read the First time.

Mr. Warbey: I beg to move, That the Clause be read a Second time.
I want to make it perfectly clear from the outset that I do not stand rigidly by the formula set out on the Notice Paper, that I intend to argue the general principle enshrined therein and to express the hope that the Government will concede that this general principle is a reasonable one and will themselves, with all the facilities which they have at their disposal for surveying the issues involved, bring forward on Report an appropriate


Clause which would do justice to the principle to ensure that householders who are called upon to pay rents which are higher than they should have to pay on any reasonable standard should receive some relief by way of a tax rebate related to the rent they pay, but with a maximum upper limit to ensure that we do not thereby be subsidising those persons who choose and can afford to live in an expensive house.
The new Clause is essentially simple; simply that there is a basic principle underlying the principle of our whole taxation system that taxation should not deprive a man or woman of the income necessary to maintain and pay for the basic necessities of life.
11.45 p.m.
I do not propose to argue that point further, although one could illustrate it from many of the forms of tax relief already provided in our finance legislation, butt I assert that it is wrong in principle, and accepted as wrong, that where a man's income is insufficient to cover payment for the necessities of life food, clothing and shelter—plus a reasonable allowance for all the other things that go towards making a modest standard of living, we should take any tax from him, and thereby diminish his ability to provide a reasonable standard of living for his family.
The need to afford relief to people who are at present having to pay an excessive amount for one of the basic necessities—shelter for their families—arises from the fact that present rents are far too high; that they are higher than the average man or woman can afford; that under the present Government they are being increased, and that they cannot be reduced by any other means than affording relief by fiscal means.
My hon. Friend the Member for Sowerby (Mr. Houghton) will probably argue that this form of relief from the excessive cost of providing a home will not be necessary in future, because, in the not-far-distant future, we shall have an opportunity to implement the Labour Party's very admirable policy, and I fully accept that. I am sure that that policy will succeed in reducing rents to reasonable levels, and I have every confidence that a future Labour Chancellor and a future Minister of Housing will co-operate in such a way as to ensure that the

scandal of our present society, by which a large number of our citizens are compelled to live either homeless or in substandard homes because they cannot afford decent homes, will he removed.
Nevertheless, I have to deal with the present Government, the present Chancellor and the present Minister of Housing, and with a Tory housing policy and rent policy established over a number of years and still being continued by the present holders of those two offices. The foundations of that policy were well and truly laid by the right hon. Gentleman who, before he became the worst Home Secretary of modern times, earned the reputation of being the worst Minister of Housing of the twentieth century. Under his administration were laid the three pillars of Tory housing and rent policy—first, the Rent Act, 1957, which is progressively abolishing public control of rents in this country; secondly, the Town and Country Planning Act, 1959, which created a free market in land and thereby laid the foundations for the large increase which is now taking place in the cost of housing and consequentially of rents; and thirdly, the creation or recreation of a free market in money.

The Chairman: Order. I am sorry to interrupt the hon. Member, but surely it is the Income Tax aspect of this matter to which he should devote himself on this proposed Clause.

Mr. Warbey: With great respect, Sir William, I am seeking to show that a form of relief to persons who have to pay excessive rents is necessary, and in order to establish that case I think I have to show that those rents are excessive, that they are beyond what many people can reasonably be expected to pay, and that therefore they should receive compention in the form of tax relief. That is the essence of my argument. This Clause, after all, introduces a new principle into our taxation. It is not a case of moving an Amendment to increase or decrease an existing relief. This proposes an entirely new form of relief.
With great respect, Sir William, I suggest that when one is proposing an entirely new form of relief and a new method of applying fiscal measures to the remedying of social injustice, one has to show that that social injustice exists, that it exists also as a result of the policy of the Government who impose taxes


upon the people, and that therefore it is the duty of the Government to rebate some of those taxes in order to redress the balance. That is the essence of my argument, and I suggest that I am entitled to show, at least briefly, that this is the policy of the Government and that it has these consequences and therefore requires these remedies.
I was saying that those policies that I have named have had the effect of creating a situation in which the cost of land has risen to excessive levels, in which speculators have been able to build up the cost of land for building, and therefore for the provision of houses to rent, to levels which are altogether excessive, and the excessive character of which is demonstrated by the fact that the share values of property companies in the last six years have risen by no less than 12 to 14 times their former value. That increase in value has come partly out of the pockets of the people seeking homes in which to live.
In the same way, the creation of a free market for money, with a prohibition on local authority borrowing for the provision of housing at less than the prevailing free market rates, has had the effect of increasing the economic rent of houses to levels which are far beyond those which householders can reasonably be called upon to pay.
The present Minister of Housing has continued and intensified this policy, building upon the foundations laid by his predecessor. He announced soon after he assumed office that he was putting pressure on local authorities to compel them to charge the economic rent of a council house to every tenant who could afford to pay. [HON. MEMBERS: "Hear, hear".] Of course, that principle sounds very good when it is enunciated in that form, but let us look at the facts. What is the present economic rent, and what proportion of their incomes can people reasonably be expected to pay in rent?
The present economic rent of a typical three-bedroom council house is £3 10s. a week, excluding rates, and the addition of rates brings it up to about £4 a week. How many people can be expected to afford to pay £4 a week for housing out of their incomes? What is the Government's standard? Do they expect a man with a wife and, say, one

child under 11, bearing as he does the taxation burden which still falls upon him today and bearing the burden of National Insurance contributions which have recently been increased, to pay rent and rates of £4 a week if his gross earnings are less than the average income of the adult male earners in this country, namely, £15 10s.? No man with gross earnings less than £20 a week should be compelled to pay a rent of £4 a week, including rates.

Mr. Peter Emery (Reading): In his estimate of £4 a week, what proportion does the hon. Gentleman consider is subsidy either from the Exchequer or from the local authority?

Mr. Warbey: I do not know whether the hon. Member has just come in or has only just begun to listen to the discussion.

Mr. Emery: I have been here all the time.

Mr. Warbey: All the time I have been talking about the economic rent.

12 m.

Mr. Emery: I am sorry but the hon. Member has not understood me. What would be the subsidy to bring it up to the economic rent he is talking about? What is the subsidy he is talking about on rents which he suggests are at an economic level of £4 a week?

Mr. Warbey: The hon. Member still has not followed my point. My starting point was the statement of the Minister of Housing and Local Government that people occupying council houses should be compelled to pay the economic rents of those houses as long as they could afford to do so. The economic rent of a typical three-bedroom house is, as stated again by the Minister of Housing and Local Government, today £3 10s. a week excluding rates; say about £4 a week including rates. Those are the rents and rates which the Minister of Housing and Local Government indicates that people occupying council houses ought to be compelled to pay.

Mr. Emery: The hon. Member must not mislead the Committee, and I am certain he would not want to. These statements are made about the economic rents of new property becoming available at the moment. The Minister has not


implied that the economic rent of all local authority property today is at the level of £4 a week. This is why specifically I have asked the hon. Gentleman if he will tell the Committee what subsidisation is a local authority tenant able to obtain on average property. I have asked him so that we can judge the matter in fairness, and so that we can be certain what benefits the local authority tenant is getting from his rate subsidy and Exchequer subsidy.

Mr. Warbey: I shall come to that in a moment. First I want to deal with the point which hon. Members opposite approved of by their voices. I think the hon. Member was among them. They indicated their approval of the principle that every occupant of a council house who can afford to do so should be compelled to pay the economic rent of the house. Now the economic rent of a three-bedroomed council house—I am sorry to have to repeat it again—including rates is about £4 a week.

Mr. Frank Taylor (Manchester, Moss Side):: Council rents in Manchester are 16s. a week on average. Is the hon. Member suggesting that the average subsidy on those houses is £3-odd—a few more shillings—for every house?

Mr. Warbey: That may well be. If that is the case I congratulate Manchester Corporation on being able to relieve its tenants to so large an extent, but to an extent which is contrary to the policy of the present Minister of Housing and Local Government, and to an extent which the Minister of Housing and Local Government is fighting hard to change. That the Minister is fighting hard to change that is indicated in the statement to which I have already referred and, secondly, by the statements made in his new White Paper on housing policy, where he has indicated very clearly indeed that it is his intention to go on with the policy of compelling local authorities to accept the principle of differential rents in order to qualify for housing subsidy at all, and that the total value of housing subsidies is therefore likely to be reduced, not increased.
I have still not had from any hon. Member opposite, in all these interjections, any indication of what they consider to he a reasonable proportion of a householder's income which he should

be expected to pay in rent. If a man is expected to pay in rent and rates a sum of £4 a week he must have gross earnings of not less than £20 a week. Hon. Members opposite talk about subsidies as if they were a form of compensation for the present high cost of providing houses to rent. The subsidy is £24 a year, or less than 10s. a week. The economic rent of the typical house is £3 10s. a week, and two-thirds of that sum is made up of interest charges.
That economic rent is double what it was five or six years ago and treble what it was under a Labour Government. The reason why it is treble under the present Government is that interest charges for building houses to rent have been allowed to rise to the present appallingly high level, and the subsidy which at one time was a reasonable compensation to the local authority for having to pay interest for the provision of houses is nowhere near providing the very large sum which local authorities have to pay.

The Deputy-Chairman (Sir Robert Grimston): I have been listening carefully to the hon. Member. I understand that he is developing a case for this Clause, but frankly I do not see where we are getting to. Could the hon. Member please address what he is saying now to how it affects the Clause?

Mr. Warbey: Yes, Sir Robert. When your predecessor was in the Chair, I explained the general tenor of my argument and its relationship to the new Clause. I thought that to justify the new Clause it was necessary to show that the current and prospective levels of rent are on the average higher than people can be expected to pay and retain a reasonable sum to provide for the other needs of their families and, that being so, it was necessary to provide them with some additional means of relief by way of tax rebate.
Members opposite suggest that relief is being provided by means of a subsidy. I was merely going on to say that that subsidy is quite inadequate for the purpose because it represents only a quarter of the interest burden which enters into the economic rent of a council house, and that therefore something more is needed in addition.
That is why I submit that, since the Government are not prepared to reintroduce rent control on a substantial scale,


or to lower interest rates, the only thing they can decently do is to provide some relief by way of tax reduction.
In order further to illustrate the point, I would like to show how this position will operate for people who will be affected, or who are hoping to benefit, by the new proposals made by the Minister of Housing and Local Government in the White Paper issued yesterday. The Minister has indicated what be considers to be the level of rents which wage and salary earners seeking to have decent homes are likely to be called upon to pay. In his proposals for a Housing Corporation— which is apparently to have the specific intention of providing houses to rent for young married couples in the salary earning and higher wage earning class who nevertheless do not earn enough to buy homes of their own—the Minister committed himself to the statement that the rents they are likely to have to pay will be between £4 and £7 a week.
This is really a most dishonest fraud on the many young married couples who are looking forward in the coming years to having a decent home of their own to live in. It is so dishonest that it can only be righted by the present Government by adopting this Clause.
What does it mean in reality? Let us take the case of the typical wage or salary earner whom the Government say they have in mind. I take it that, by the time the Housing Corporation gets into action, in view of the further increase in the cost of land which will have taken place, in practice it is unlikely to be able to charge an economic rent lower than £4 to £5 a week, on top of which there will be rates averaging about 15s. a week. This will mean a total of £5 a week which a family will be expected to pay. Who is going to be able to pay that sort of figure?
12.15 a.m.
Let us look at the situation of some typical familities among those the Government are said to have in mind.
Let us take, first, the case of the man earning the average wage of adult male workers—about £15 10s. a week, about £800 a year. That man under the new proposals made by the Chancellor in the Bill, taking into account all the reliefs that the right hon. Gentleman offers in

the Bill, will still have to pay tax of £46 2s. a year. On top of that, with the increase in the insurance contributions which are just coming into force, assuming that he is contracted in he will have to pay 17s. 4d. a week. With 17s. 9d. tax and 17s. 4d. insurance contributions, the net take-home pay of the average adult male worker will be £13 14s. a week. Does any right hon. or hon. Gentleman suggest that a man with a wife and a child under the age of 11 and with a net income of £13 14s. a week will he able to afford rent and rates of £5 a week, leaving him with £8 14s. to pay for food, clothing and all the other necessities? All hon. Members would regard that as totally unjust.
I go higher up the scale and take the case of the £1,000 a year man—the case, for example, of the Member of Parliament, whose salary is £1,000 a year, the case, for example, of the highest level of wage earner and the average level of salary earner. It sounds a lot, but it means £19 5s. a week. On this a married man with one young child will have to pay on the new scales tax of £96 5s. 6d., or £1 17s. 8d. a week. His insurance contributions will be 19s. 4d. The total deductions from his pay will be £2 17s. a week, leaving him with £16 8s. Is a man with a net income of £16 8s. a week expected to pay rent and rates of £5 a week to provide a home for his wife and child? Is that what the Government expect?
There will be some who will be driven to such desperation by the general housing policy of the Government that they will take on that obligation. They will take on that obligation either by forcing their wives to go out to work to help to pay the rent or by sacrificing the rest of the standard of living of their family. That is why I say that the new housing policy of the Government is just as much a cruel fraud on the mass of the home seekers as their past housing policy. Any right hon. or hon. Member can work out for himself that to be able decently to afford rent and rates of £5 or £6 a week a man needs to have gross earnings of not less than £1,500 a year. That rules out completely practically every wage-earner and three-quarters of the salary earners. Unless the Chancellor is prepared to adopt the principle of this Clause, nine-


tenths of the population will derive no benefit whatever from the Government's housing proposals. Nine-tenths will be condemned for years to come, should we have the misfortune to retain a Tory Government, to sacrifice their general standard of living in order to be able to afford decent homes for their families.
We are placed in a situation in which in order to provide large incomes for money lenders and speculators 90 per cent. of the people are mulcted in high rent and mortgage payments which leave them with a miserably low standard of living in this so-called affluent society. That is the situation which I ask the Chancellor to remedy by the only means left in his hands. That is by introducing the principle of a tax relief for the payment of rent.

Mr. Barber: The hon. Member for Ashfield (Mr. Warbey) has spoken at some length about this new Clause. He also referred to it during an earlier discussion we had in Committee. As I understand, he considers that this proposal for some form of rent allowance is particularly appropriate because of the abolition of Schedule A. I gather from what he said on an earlier occasion that he does not dissent from the proposal to abolish Schedule A, but he thinks that if the owner-occupier is to be given some form of tax relief so also should the tenant. I must tell him frankly and straight away that I fundamentally disagree with him. It is with no disrespect to him that I say that in my view his argument is wrong both in logic and on social grounds.

Mr. Warbey: I hesitate to interrupt the hon. Gentleman so early, but I hope that he will address his reply to what I said in the course of my speech this evening, in which I did not base my argument at all on the parallel of the abolition of Schedule A.

Mr. Barber: In that case I shall not refer again to the speech the hon. Member made previously when he gave notice that he would put down this new Clause. That relieves me from the necessity to deal with that matter.
I certainly do not intend—I say this with all respect to him—to answer all the points he made about the Government's housing policy or the attitude of

previous Ministers of Housing. It has always been the policy of this Government, as he knows full well, to encourage home ownership, to build up what we call, and many hon. Members opposite accept, a property-owning democracy. I need not weary the Committee again with figures of achievement over the past few years in this respect. I believe that the abolition of Schedule A will give one more boost to the extension of home ownership. On that score it has been welcomed, I believe, by all hon. Members.
It is true, as the hon. Member indicated, that a house—whether owner-occupied or not—is a necessity of life just like food and clothing. It is true that no Chancellor of the Exchequer could ignore such basic facts as the cost of renting a house, to which the hon. Member repeatedly referred, in the same way as no Chancellor of the Exchequer could ignore the cost of food, but there is no better case for a special tax allowance in respect of rent than there is for a special tax allowance in respect of the cost of food.
The proper way to take account of these items is in the personal allowances, which the Bill proposes to increase by £80 for married persons and £60 for a single person. There are millions of rent-paying tenants who are protected by the State from paying an economic rent either by housing subsidies or through rent control. When considering relief from Income Tax, I am sure that the right way to take account of the factors to which the hon. Member referred—the size of income and the cost of the necessities of life, including the level of rents—is by the various personal allowances, and this my right hon. Friend has done this year. The Committee will bear in mind that the total cost of the remissions amounts to £240 million in a full year. The hon. Member referred to those whose incomes were below £20 a week. But 42 per cent. of the remissions in personal taxation will go to people with incomes of less than £1,000 a year.
The cost of the hon. Member's proposal, I understand, would he £50 million in a full year, which is slightly more than the cost of abolishing Schedule A, but it would be unlikely to end there, and if an allowance were given for all rents—I accept that this is not the hon. Member's immediate intention—the cost


would be in the region of £150 million. For these reasons, I ask the Committee to reject the new Clause.

Mr. Houghton: It is a great misfortune that this Clause is debated at this hour of the night, for there could have been a good deal to say about it. My hon. Friend the Member for Ashfield (Mr. Warbey), with respect to him, did not develop the case for the Clause in the way in which I would have done had been moving it. He did not explain the significance of the relief proposed in the new Clause and why it is what it is.
It arises directly out of the abolition of Schedule A on owner-occupiers. But for that, the new Clause would never have made its appearance on the Order Paper, at any rate not in its present form. It is the sort of thing which the right hon. and learned Member for the Wirral (Mr. Selwyn Lloyd) anticipated would arise if Schedule A were abolished on owner-occupiers. It was this sort of proposal which he said was a sobering thought when he was asked to abolish Schedule A. He specifically said that some such claim as this would be made and it would be costly. He said that he had to keep it in mind. It was to an extent a discouragement from abolishing Schedule A, because the cost of abolishing Schedule A on owner-occupiers, high as it was, would become higher still if he had to concede something in the way of rent relief. But only a week ago the Economist, in an article entitled "The Ghost of Schedule A", referred to the prospect that this sort of claim would be made and that Governments would hear repeatedly about it in the days to come. So, I believe, they will.
12.30 a.m.
It is too late to develop this case now, and I think we shall have to leave it to another occasion. But before I sit down I should like to explain why the proposal is that tax relief should be given on one-third of the rateable value in the case of the occupier of rented accommodation. For years now the owner-occupiers of dwellinghouses have been assessed for Income Tax purposes under Schedule A on annual values very much below the current rental value of their houses. The assessments have been broadly related to the

annual values of 1939, and they were quite low enough even at 1939 values.
Throughout the intervening years, although the Income Tax Act defined the assessment of the occupation of property owned by the occupier at the annual value on conventional lines—current rental value—owner-occupiers have, in fact, been paying tax on values which have long been obsolete. The new valuations are, broadly speaking, two and a half to three times the old valuations for rating purposes, and it seemed that if a rent allowance were to be claimed it would be appropriate that tenants should get tax relief on something equivalent to the old valuations since it was on the old valuations that the owner-occupier had been assessed. That is why it was suggested in the new Clause that to have relief not on the full current valuation of the house but on the broad equivalent of the valuation on which the owner-occupier had been assessed would be a fair compromise. That is the basis of the new Clause.
As to the relative tax position of the owner-occupier and the tenant, there is a good deal that can be said about that. There is no question that in present circumstances the owner-occupier, the person who is buying his house, is buying an asset of appreciating value. He is buying it on mortgage granted to him on the current value of money which he will repay over the years at the present value of money. That also is a hidden asset in the eventual outcome of the transaction.
However, I do not think that I should pursue the matter now. The Committee is weary; I am weary. These debates go on late into the night. We have a long day in front of us tomorrow and we have to see the Bill through Committee before we break off tomorrow night, or Friday morning. I will content myself with saying that I would be unhappy if this case went by default on the first occasion that it has been debated specifically on a new Clause. I think that I ought to allow it to rest at that. I do not want to get involved in a cross-argument about it. I just put on the record one or two of my thoughts on the subject. I know that there is an answer to it—I fully acknowledge that and the Financial Secretary was probably discouraged from deploying the reply to me because my hon.
Friend invited him to reply to something else. That is just the state we get into when we carry on too late at night.
I hope that when I sit down somebody will pop up quickly and bring this debate to an end, because I do not think that it would be profitable to continue it any longer. As long as what I have said is on the record for later consideration on another occasion, a more suitable occasion, I shall be content.

Question put and negatived.

Mr. Boyd-Carpenter: I beg to move,
That the Chairman do report Progress and ask leave to sit again.
As I indicated a little time ago, it seems to us that this is a good time to break off and start with the new group of new Clauses which Sir William indicated would be taken with the next new Clause. But I must warn the Committee that we have a very heavy programme ahead of us—I was about to say tomorrow, but in Parliamentary language it is this day—and it will require a good deal of hard work and co-operation if we are to finish tomorrow, as we must, without imposing on the Committee a very late sitting, indeed. I agree with the hon. Member for Sowerby that we have proceeded far enough this morning.

Question put and agreed to.

Committee report Progress; to sit again this day.

Orders of the Day — HOUSING (GLASGOW'S OVERSPILL)

Motion made, and Question proposed, That this House do now adjourn. — [Mr. MacArthur.]

12.38 a.m.

Mr. James McInnes (Glasgow, Central): I welcome the opportunity, even at this late hour of the morning, to deal with what I regard as one of the greatest social problems in this country, namely, that of Glasgow's overspill. At the outset may I briefly outline the problem which confronts the City of Glasgow and which has made overspill an absolute necessity? Although since 1919 Glasgow Corporation has built no fewer than 121,000 houses, there still remain 78,000 applications on the housing waiting list. Of the 329,000 houses in Glasgow, almost one-third are either sub-standard or

totally unfit, while 34,000 people live more than four persons in one room and 19,000 more than three persons to one room. Almost half the houses in the city have only one or two rooms and more than 400,000 people are living in them. This is indeed a depressing picture and one which, in my submission, calls for drastic action.
I want to examine the action the Government have or propose to take to deal with this grave social problem. I do not propose to go through the whole history leading up to Glasgow's overspill problems, because it would mean my going back to 1943 and the setting up of the Clyde Valley Regional Planning Advisory Committee which, in turn, appointed the late Professor Abercrombie to undertake the preparation of a plan for the whole of the Clyde Valley region. That plan was completed in 1946, but I shall content myself by starting with the year 1952.
It was in that year that the then Secretary of State for Scotland invited the Clyde Valley Regional Planning Advisory Committee to undertake a study of Glasgow's overspill as a matter of extreme urgency. That Committee reported in 1954 and indicated that about 300,000 people would require to be overspilled outwith the City of Glasgow. That report resulted in the designation of the new town of Cumbernauld in 1956 and led eventually to the passing of the Housing and Town Development (Scotland) Act, 1957. That Act provided for Glasgow to export its 300,000 overspill to existing townships throughout Scotland and to the new towns then existing.
The Act of 1957 set out administrative and financial arrangements under which Glasgow, as the exporting authority, would pay to the receiving authorities £14 per year for ten years for each family rehoused either in a reception area or in a new town. It is interesting to note what the then Joint Under-Secretary of State for Scotland, now Lord Craigton, said in Committee on the 1957 Act. He said:
. we look upon this operation as a sort of first ten-year plan. Within that period the target is to provide 15,000 houses … in overspill areas of other local authorities; and another 20,000 houses in the two new towns." — [OFFICIAL REPORT, Scottish Standing Committee, 7th May, 1957; c. 811.]


That is 35,000 houses, or an average of 3,500 a year for ten years. Exactly six years have elapsed since the passing of the 1957 Act. Under the target set by the Minister, of 3,500 a year, we should by now have built 21,000 houses, instead of which we have built only 6,923. In other words, we have achieved only one-third of the target.
That is an appalling and deplorable record, and one cannot ignore the tragic effect that this lamentable failure on the part of the Government to achieve even their own modest target has had, with 14,000 Glasgow families having to remain in the sordid and squalid conditions in which they live in the city. At the present rate of progress that has been achieved over the past six years, it will take 84 years before we are able to remove the overspill of 100,000 from the city.
The failure to overspill these families has created many other problems. For example, it has had the disastrous effect of retarding the redevelopment programme. Only by moving the population out of the city in large numbers will it be possible for Glasgow to proceed with its redevelopment policy within the city's 29 areas. Why have the Government failed so lamentably to deal with this problem? I think that the simple answer is that they are not prepared to face up to the expenditure involved. It is a simple matter of finance.
They are not even prepared to provide any form of inducement to industrialists to move. Admittedly, they give—

Mr. F. J. P. Lilley (Glasgow, Kelvin-grove): But that is not so. The Government do offer industrialists inducements.

Mr. McInnes: I wish the hon. Member would let me finish my sentence.
Admittedly, there is a measure of compensation for disturbance, but that is all, and that compensation is grossly inadequate, and not attractive enough to encourage industrialists to move farther afield. It is true that some of them have moved to Kirkintilloch, Cumbernauld and East Kilbride, but those places are on Glasgow's doorstep. Practically no industry has moved to such places as Stranraer, Wick or Dunbar, or the outlying places. Apart

from the industrialists, what about the family that has to move? Apart from the disturbance caused by moving to, say, Wick, Stranraer or Dunbar, there is the cost of removal, but no compensation, no financial inducement, is given.
I want to compare Glasgow's overspill with that of London. Between December, 1946, and October, 1949, eight new towns were provided to deal with London's overspill. Those new towns did not cost the London County Council or the London boroughs a single penny, and today 85,000 families are located in them. Since then, however, London has had its Town Development Act, 1952. What do the London boroughs pay to overspill families into reception areas and into new towns? They pay £4 a year to the Minister of Housing and Local Government for each family overspilled to a new town, and when they overspill a family into a local authority reception area they pay £8 10s. per family for ten of fifteen years according to an arrangement made under a voluntary agreement. In Glasgow the city has to pay £14 a year for ten years in respect of each family overspilled either to a local authority reception area or to a new town. That amounts to £140, and when the whole overspill operation is completed it will cost Glasgow £14 million.
Why should Glasgow be saddled with this intolerable burden? What justification is there for this discriminatory and outrageous demand? Why should Glasgow ratepayers be asked to bear this burden? The dispersal of population and industry is a matter of Government policy, a policy based on strategic, economic and social considerations, and no Government should be allowed to evade their responsibilities on such a serious problem as overspill.
I conclude by dealing with the much-vaunted White Paper on Housing, issued by the Government yesterday. What are the proposals in this White Paper for dealing with this great social problem? One sentence, which reads:
For Glasgow, the Scottish new towns and other overspill schemes will continue to play their part; within the period the Livingston new town will make a substantial contribution.
There is one sentence, conveying absolutely nothing, and in essence it is a


continuance of the negative policy that the Government have pursued ever since they tackled this problem. The Government stand condemned for their lamentable failure to deal with what I regard as the greatest social problem in the whole of this country.

12.53 a.m.

The Under-Secretary of State for Scotland (Mr. Gilmour Leburn): The hon. Member for Glasgow, Central (Mr. McInm;) has spoken with his usual clarity and forthrightness on this subject, on which we have heard him before, and he has made a number of criticisms of the Government's policy and programme concerning the question of Glasgow housing, with particular reference to overspill.
I do not think the hon. Gentleman will expect me tonight, in the time that remains. to try to deal with our Government White Paper, but I will be very happy to discuss that with him in full on a later occasion.

Mr. William Hannan (Glasgow, Mary-hill): It would not take very long.

Mr. Leburn: We all understand and admire the hon. Member's close personal knowledge and awareness of what the Glasgow housing problem means. I shall try to demonstrate that that awareness is shared by the Government, and to show how, by our actions, we are contributing substantially and progressively to a solution.
We are on common ground in our concern at the size and seriousness of the Glasgow housing problem. The hon. Gentleman has given certain figures. In this respect, I think that precision is impossible, and I propose to say no more than that we accept what is stated in Glasgow Corporation's 1960 development plan survey report:
The Corporation's redevelopment programme for the 1960–80 period is aimed at rehousing 100,000 families from the central areas, and the overspill which will be created by these operations will be approximately 60,000 families, involving in all probability at least 200,000 people".
A redevelopment programme of that size is in itself an enormous undertaking, even if no overspill were involved.
Under the Development Plan, the Secretary of State has approved 29 areas for redevelopment, some of which are already

under way. Alongside this programme of major redevelopment, the corporation has undertaken a very comprehensive review of existing smaller sites within the city capable of use, or of more intensive use, for housing in the shorter term. I think that there is plenty of evidence, if one looks around Glasgow, of the energetic way in which the Corporation is tackling this. I myself have seen one or two of these schemes, and I mention particularly the schemes on the sites of the old Maryhill Barracks and the Duke Street prison.
The number of houses actually under construction by the Corporation and the Scottish Special Housing Association in March this year was 6,430, as against 3,336 at the same time last year. There should be an output of well over 3,000 houses per year over the next few years.

Mr. McInnes: Utter nonsense.

Mr. Leburn: We hope also that the rate of output will be further increased by the adoption of new techniques of building which both the corporation and the association are considering.
Even so, progress with redevelopment in the longer term—here I agree with the hon. Gentleman—must depend on the rate of overspill. This is an extremely complicated business, since we are entirely dependent on voluntary movement. No one can compel individual families to move from Glasgow; they must select themselves, so to speak. When families move out, the help which their departure gives to the corporation's redevelopment programme may be very indirect, and a lengthy chain of decanting may be necessary before families in the redevelopment areas can benefit. There is, however, really no other way of operating a fair and democratic overspill scheme.
There is no doubt as to the readiness of very many local authorities throughout Scotland to participate in the overspill programme. Overspill agreements have now been approved between 46 local authorities and Glasgow Corporation covering the provision of nearly 10,000 houses outside the new towns, apart from the further contribution which the Government are prepared to make in each case by way of houses built by the S.S.H.A.
It is, of course, a far cry from the completion of overspill agreements to


the actual housing of Glasgow families. Since there is no purpose in committing houses until jobs are assured for Glasgow workers to come to, it may be a very long time before the agreements are implemented. Nevertheless, many local authorities are ready to make a small number of houses available as an earnest of their intentions, and varying numbers of Glasgow families have already been accommodated in as many as 18 receiving areas excluding the new towns.
The key to increased overspill movement is jobs in the reception areas, and filling as many of these as possible with workers from Glasgow.
The two industrial developments making the greatest contribution to overspill movement at present are the Rootes-Pressed Steel development at Linwood and the B.M.C. development at Bathgate. Already about 500 of the Glasgow workers recruited at these factories have been housed under the overspill arrangements. More than 2,800 further houses for overspill families are under construction or about to be started in the surrounding areas.
I know that when the Housing and Town Development (Scotland) Bill was before the House in 1957 an estimate was given that in a period of 10 years 20,000 houses would be built for overspill in the new towns and 15,000 in the other reception areas, an average, as the hon. Gentleman says, of 3,500 a year, and it is certainly true that that target has not yet been hit. I think that if the hon. Gentleman considers it for a moment he will see it would have been unrealistic to have expected houses to be started actually before 1959, after the passing of the 1957 Act.
If we take the period from the beginning of 1959 to the end of March this year the total number of overspill houses built was about 6,500. Of those 656 were completed in the first quarter of this year alone, by far the largest number in any quarter so far. Output is rising from all sources, and I believe that there is every prospect that at least 3,000 houses will be ready this year. This is not all. During the same period, January, 1959, to March, 1963, the Corporation and the S.S.H.A. built 11,852 houses within the city. Over the next year they should build 10,000 more, and

this is a much larger continuing building programme within the city than we ever thought sites could be found for in 1957.

Mr. McInnes: Ten thousand a year? Surely not.

Mr. Leburn: I said or intended to say, in the next three years.
If we add to this the output of the reception areas where 9,500 houses should be built in the next three years we have a total over the seven years from 1959 to 1965 of the order of 37,000 houses or well over 5,000 a year. I think this is no mean achievement.
The hon. Gentleman suggested, I think, that we were not giving Glasgow sufficient assistance in this matter of overspill. I think when he makes his criticism he really does not fully appreciate what in fact the Government are doing. The Government are playing a very major direct part in this programme in two ways—through the Scottish Special Housing Association, and through the new towns. Virtually the whole of the Association's activities are being directed at the Glasgow problem both by assisting the Corporation's housing effort within the city and by assisting the efforts of local receiving authorities. This, along with the special subsidy for overspill houses built by local authorities, represents a major contribution on the Government's part, and a form of Exchequer assistance which is not available to assist any other local housing programme. The Scottish new towns programme which in its present form represents a Government commitment of something like £170 million is also largely directed at assisting the Glasgow problem. At the present time 3,235 houses are under construction in the new towns and the vast majority of these will be let to Glasgow families.
I know that the hon. Gentleman feels that insufficient speed is being made with the building at Cumbernauld and the new town at Livingston. I would agree with him that up to date building at Cumbernauld has been disappointingly slow, but they are making headway now and they have been faced with formidable difficulties. I believe that Livingston can make a tremendous impact on this


question of Glasgow overspill. But I think that it would be wrong to rush at Livingston before we have had time for it to be properly planned. Unless we do that we may regret later on having rushed the matter.
I agree with the hon. Member that we have a long way to go on this immense problem of Glasgow overspill, but I believe that a good deal has been done. I am confirmed in this view by a most comprehensive analysis of the whole subject of overspill made by the convenor of Glasgow Corporation's Overspill Commitlee, in a paper which he read in March to the Annual Scottish Conference of the Institute of Housing. The conclusions which he reached were:
The progress made to date can be regarded as justifying the practicability of the plan to rehouse 60,000 Glasgow families in expanded and New Towns throughout Scotland. There has been an immediate and significant contribution to the city's housing need, Glasgow and non-Glasgow firms have provided the jobs necessary to achieve this and to facilitate the construction of many thousands. of new overspill houses over the next five years, Glasgow workers have made it possible for the Reception Areas to increase their attractiveness to expanding industries and the Receiving Authorities, Glasgow Corporation and central Government Departments have achieved a level of co-operation which promises well for the future

I suggest to the hon. Member that those conclusions provide a fair representation of the overspill movement and the opportunities it presents, and acknowledges in a generous way the tremendous efforts which are being devoted in a wide range of local government to the solution of this major social problem which the hon. Member and myself have at heart.

Mr. William Ross (Kilmarnock): The Under-Secretary of State said that we have still a long way to go. We can judge how long that way will be only by the promises given in the past and the performance we have so far seen. The hon. Gentleman was not in the House at the time, but I recall very well the occasion when the noble Lord Craigton, as he now is, made a speech on overspill. I can well remember, as no doubt you do Mr. Deputy-Speaker, the long debates we had, for one of which we sat all night.

The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eight minutes past One o'clock.